Last week Russia announced closures that would take place with the Nord Stream 1 pipeline. This pipeline connects Russia and Germany in which Russia supplies gas to the continent. Leaders across the EU began to see this as a political challenge from Russia to upset their energy markets and drive-up prices.
On Monday Russia stopped gas flow to Europe through the pipeline for the scheduled ten-day reduction. However, the German energy regulator believes that the Kremlin may continue to strain the EU's supplies after the planned shutdown comes to an end.
If the suspension of supplies was extended past the 10-day timeline this could possibly cause further disruption to the regions winter supplies. Suppliers across Europe were already worried that gas hubs were not going to meet their target capacity for storage by November. This temporary shutdown is going to increase that struggle.
The EU receives around 40% of their gas supplies from Russia. Due to the tightening of supplies, countries across the EU have had to scramble to find other gas deals which has led to market volatility and high prices. Russian gas flow has already dropped by 60% this year which has caused energy suppliers to urge customers to start rationing gas as they fear many blackouts across Europe for the winter.
The EU’s energy struggle over the end of the year is likely going to affect the UK's gas markets. The UK doesn’t get many energy supplies from Russia. However, if Russia cut supplies this is going to increase the market value of gas contracts from other places causing staggering prices for the winter.
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