European gas prices rose 30% after Russia cut off gas supply to Europe for an indefinite amount of time. Russia has been known in the past for using gas supply as a political tool when its interests are at stake.
A leak led to the shutdown of Nord Stream 1, causing a price surge in the benchmark gas. This price was over 272 euros per megawatt-hour (MWh).
The price of a Dutch TTF October gas contract had risen to 256 euros, up 23% from yesterday. Prices are 400% higher than a year ago and are squeezing already struggling consumers.
Russia has been accused of weaponizing energy supplies in retaliation for Western sanctions imposed on Moscow. 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, has supplied about a third of the gas Russia exported. It supplies around 20% of gas for Europe but gas flows have been halted for maintenance.
The reduction of natural gas in the EU has left them without a backup plan for this winter, which may lead to energy rationing. Many state governments have taken action and have created emergency plans in case there is a shortage. This leads to a rise in unemployment and an increased possibility of a recession.
Power costs have already forced energy-hungry industries to scale back production and governments to help households.