Natural gas used to be known as the ‘champagne’ fuel, a luxury energy source that only wealthy nations could afford. Coal, by contrast, was ‘beer’ – the cheap and ubiquitous fuel of the masses. As the world plunges into a full-blown energy crisis that carries a tangible risk of physical supply shortages, liquefied natural gas cargoes are becoming as valuable as original Rembrandt, Cézanne or Munch masterpieces.

It is hard to overstate the insanity going on in energy markets right now. The risk premium that Russia’s invasion added to already-overheated global commodities has created an exceptional money-making opportunity for those participants placed to capture the enormous differentials between energy-producing basins and import-dependent regions.

Nowhere is this more apparent than in natural gas. Sanctions risk is growing by the day, with the UK on Tuesday banning Russian oil imports but excluding gas – for now, at least – and the US moving to ban all Russian energy imports. Extreme uncertainty of an imminent cut-off in Russian gas flows is driving market sentiment in giddying and erratic ways. Prices are moved by fear, not fundamentals.

Let’s take a look at the recent rollercoaster action on EU gas hubs, before analysing what this means for US LNG profit margins and the profitability of burning such expensive gas in EU power markets. Then we will wrap up with the EU Commission’s latest attempt to bring some semblance of sanity to this madness and, ultimately, wean the bloc off Russian gas.