“Lehman Event” Looms For Europe As Energy Companies Face $1.5T In Margin Calls
https://oilprice.com/Energy/Energy-General/European-Energy-Companies-Face-15-Trillion-In-Margin-Calls.html-Europe is facing a potential “Lehman Brothers” event as energy companies face $1.5 trillion in margin calls.
-Some countries in the EU have already decided to set up funds to avoid a collapse of their energy derivatives markets.
-The crisis deepened after Russia said on Friday that the Nord Stream gas pipeline to Germany would remain closed indefinitely.
European energy companies are facing margin calls of a total of $1.5 trillion in the derivatives market and many would need policy support to cover them amid wild swings and skyrocketing gas and power prices, an executive at Norway’s energy major Equinor told Bloomberg on Tuesday. According to Helge Haugane, Equinor’s senior vice president for gas and power, the $1.5-trillion estimate is even “conservative”.
Liquidity at energy firms is drying up as many companies have started to struggle to meet their margin calls on the energy derivatives market.
“If the companies need to put up that much money, that means liquidity in the market dries up and this is not good for this part of the gas markets,” Equinor’s Haugane told Bloomberg.
Some countries in the EU have already decided to set up funds to avoid a collapse of their energy derivatives markets. Finland and Sweden put out plans this weekend to support their energy companies trading in the electricity derivatives markets, looking to avoid a “Lehman Brothers” event in their respective energy industries and financial systems.
Europe's energy crisis is way more severe than in America.
