The price of gas in Europe has soared by as much as 30% after Russia announced it would not reopen its main gas pipeline to Europe. Meanwhile, the Euro fell below 99 cents for the first time in 20 years Monday, after Russia said it would shut off its main gas supply pipeline to Europe indefinitely.
Global stock markets sank Monday as Europe faced a new squeeze on Russian gas supplies.
London and Frankfurt opened lower. Tokyo, Hong Kong and South Korea fell while Shanghai gained. Oil prices rose more than $2 per barrel while the euro edged lower.
Markets were roiled by Russian energy giant Gazprom’s announcement Friday that a suspension of gas supplies through the Nord Stream 1 pipeline would be extended indefinitely. That adds to shortages in Germany and other economies.
A global surge in wholesale power and gas prices means households across Europe face much higher energy bills this year and beyond, with the region's most vulnerable exposed to fuel poverty, consumer groups say.
Europe has accused Russia of using gas supplies to blackmail European countries because of the Ukraine conflict, which Moscow denies.
Europe's reliance on Russian gas leaves it exposed
The European Union (EU) has balked at banning Russian natural gas — which last year accounted for 40 percent of the bloc's imports — but has pledged to minimize its dependence. However, the Kremlin has cut off or limited exports to a dozen EU countries, and imports at the end of August were 68 percent lower than at the same point last year.
Nord Stream has been running at only 20 percent of its capacity in recent weeks, and the German Government is increasingly pessimistic about any return to normalcy.
Despite efforts to hinder Moscow's energy exports — the mainstay of the country's budget — a combination of high dependency on Russian energy in many EU countries, and strong demand from countries such as India and China, hasn't stopped the flood of cash into the Kremlin's coffers.
Although Russian oil exports fell in June, the country still earned $20.4 billion for the month, a 40 percent increase on the same month last year, according to the International Energy Agency.
Winter is coming
European ministers have accused Russia of using energy supplies as an economic weapon against those supporting Ukraine. Moscow has denied it is deliberately restricting exports in the run-up to winter, pushing up costs for households and businesses.
Europe has accused Russia of weaponising energy supplies in retaliation for Western sanctions imposed on Moscow over its invasion of Ukraine. Russia says the West has launched an economic war and sanctions have hampered pipeline operations.
The Nord Stream pipeline, which runs under the Baltic Sea to Germany, historically supplied about a third of the gas Russia exported to Europe but it was already running at just 20% of capacity before flows were halted last week for maintenance.
Russian gas being supplied via Ukraine, another major route, has also been reduced, leaving the EU racing to find alternative supplies to refill gas storage facilities for winter. Several states have trigger emergency plans that could lead to energy rationing and raising prospects for a recession.
(with inputs from agencies)