ANALYSTS warned last night that escalating tensions over Russia's seemingly inevitable invasion of Ukraine would hit European gas supplies.

Goldman Sachs suggested delays to the approval of Russia's new pipeline into Europe, Nord Stream 2, could see gas prices spike. The bank warned this could push prices further up, putting pressure on energy companies as well as contributing once again to a worldwide inflationary push.

The investment bank said: "Should tensions between Russia and the Ukraine escalate, the initial uncertainty around its impact on gas flows would likely lead the market to once again add a significant risk premium to European gas prices."

The freshly constructed pipeline is still awaiting approval from Germany's regulators, following concerns over its governance.

German Chancellor Olaf Scholz revealed the country could refuse to approve the pipeline if Russia invades Ukraine, with the Kremlin positioning over 100,000 troops near the country's borders over the past month.

Gas prices boomed nearly 20 per cent on both the UK and Dutch benchmarks yesterday, amid increased uncertainty over supplies.

If the Nord Stream 2 pipeline was snubbed it would likely both exacerbate current shortages and antagonise Moscow, with the EU currently dependent on Russia for around 40 per cent of its natural gas.

(c) 2022 City A.M., source Newspaper