Gas prices soar and pound and euro fall as Russia shuts Nord Stream pipeline
Gas prices surged on Monday and the pound and euro slumped after Russia shut down a big pipeline indefinitely.
Russia has used its control of gas supplies to exert pressure on European countries in retaliation against sanctions imposed after its invasion of Ukraine. Gazprom, the Russian state-controlled gas company, closed the Nord Stream 1 pipeline from Russia to Germany on Friday, saying it had found a leak requiring repair.
The threatened cuts to supplies of gas from Russia have prompted a scramble by European countries to store as much gas as possible before winter, as well as efforts to find alternative supplies.
However, the prospect of Russia cutting off an important pipeline completely caused prices to increase on Monday, as investors brace for severe shortages. The contract for gas delivery next month in the UK soared by 35%, to 550p a therm. That was an increase from the 410p a therm cost on Friday afternoon, and approaching the five-month high of nearly 650p set last month.
Winter gas prices were also up sharply. The wholesale UK gas contract for November jumped 27% to 638p a therm on Monday morning, while the December contract rose 26% to 720p a therm. Both are near last month’s record highs.
The benchmark Dutch TTF October gas contract rose by 30%, up €62 to €272 a megawatt hour.
The threat of gas shortages has also deepened concerns over recession risks in economies dependent on the fuel for industry and electricity generation, including the UK and the EU. That has caused their currencies to weaken as investors seek safety in the US dollar and reduce exposure to an economy that may have to cut back industrial production meaningfully.
The euro on Monday hit a 20-year low against the US dollar, falling as low as
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