Energy Stocks Are Poised to Profit from Energy Crisis in Europe

Energy stocks are expected to outperform as Europe could face gas shortages this winter after Russia reduced supply deliveries.

KTBST Securities sees a positive outlook for energy stocks following the announcement on Monday by Russia’s state-owned Gazprom that it will reduce daily deliveries via the Nord Stream pipeline to Europe to 33 million cubic meters per day beginning on Wednesday, bringing gas flows to 20% of capacity.

As winter approaches, this might lead to gas shortages across Europe.

The European Union has unveiled its emergency gas rationing plan, “Save Gas for a Safe Winter,” which sets a 15% reduction in gas demand for the 27 member states between August and March of next year.

If the EU adopts this plan, it would result in a fall in the demand for electricity, particularly for industrial usage, and it will also have an effect on the production chain in Europe.

Therefore, KTBST believes that energy and petrochemical shares will benefit from this potential EU action.

The energy sector, particularly those upstream operators of the oil and gas industry, will gain from higher energy prices during the winter period, as growing demands and tight supply lead to higher energy prices. As a result, LNG prices will rise, as will the prices of coal and crude oil as alternatives. PTTEP (BUY/TP: THB190), BANPU (BUY/TP: THB16) and SPRC (BUY/TP: THB15.50) are Top Pick.