The latest sign Europe’s energy problems are worsening is that Austrian oil and gas firm OMV AG halted crude product deliveries from storage facilities in Germany amid a “run” on supplies, Bloomberg reported.
OMV Germany said two storage facilities in the southern part of the country “are observing a current run on heating oil and … this is possibly due to crisis-driven market shortages and thus excessive speculation and stockpiling.”
“In order to secure supplies in the short and medium term, loading will now be temporarily suspended until the Burghausen refinery has resumed production,” OMV said in an emailed response, adding Burghausen and Feldkirchen’s storage facilities will restart deliveries on Aug. 15.
A combination of issues has led to diesel and heating oil in southern Germany, Austria, and Switzerland.
First is the energy disruption due to Western sanctions on Russia.
Second OMV’s Burghausen refinery maintenance.
And third, falling water levels on the Rhine River have reduced deliveries of crude product shipments from the North Sea.
The panic hoarding of diesel and heating fuel likely comes from utilities who have had to switch the type of power generation from natural gas to other crude products due to capacity constraints on the Nord Stream 1.
German power prices have soared to a new record of more than 400 euros per megawatt-hour on the European Energy Exchange on Thursday on the prospects of a worsening energy crisis.
With Brent crude prices tumbling below $100 a barrel, it appears the paper oil market is out of touch with the tightness reality of physical markets.