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European energy companies are placing larger orders for natural gas from Russian firms, despite Russia’s invasion of Ukraine, reported Bloomberg News.

The military action against Ukraine has resulted in oil prices surging to above $100 per barrel, for the first time since 2014.

The energy companies in Europe, however, are looking to purchase more fuel from Russian firms, including Gazprom PJSC, under long-term contracts.

These deals are priced in a way that means imports from Moscow are now cheaper, compared to spot gas at hubs in other European nations, according to the publication.

BloombergNEF gas analyst Stefan Ulrich said that current gas prices are ‘well above the likely sales price for many Gazprom import contracts, and so driving purchases higher’.

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By GlobalData

Ulrich stated: “There may also be a strategic component as buyers seek to buy now, given a potential for disruption inflows or further price increases.”

An additional 6.5 million cubic metres a day of pipeline space has been booked by traders to flow gas through the Velke Kapusany entry point, on the border between Ukraine and Slovakia, to Europe.

The publication cited data from Ukraine’s grid operator that shows Russian gas exports via Ukraine have risen by almost 38% on 24 February, with the possibility to increase even further.

Global crude oil prices have increased by nearly 3% over concerns of global supply disruptions that could result from the potential impact of trade sanctions on Russia.

Global benchmark Brent crude increased by $2.81, or 2.8%, to reach $101.89 a barrel at 7:38am GMT while US West Texas Intermediate (WTI) crude rose to $95.64, reported Reuters.

The news agency cited OANDA senior market analyst Jeffrey Halley as saying: “The Ukraine situation will serve to keep prices elevated, as will the threat of disruptions, real or imagined, coming in an environment of already strong demand and constrained supply globally. I believe Brent crude will now trade in a $90-110 range over the next few weeks.”

Earlier this month, Glencore announced that it has agreed to sell its stake in the Russian oil company Russneft, to an undisclosed buyer.