Russia’s decision not to resume gas flows through the main Nord Stream 1 gas pipeline to Germany has caused a spike in wholesale costs, heightening concerns about supplies across Europe for the coming winter .
State-owned Gazprom abandoned plans to restart the pumping of limited volumes on Saturday after a shutdown for maintenance, involving a turbine leak.
The decision – which European governments say is a retaliation for Western sanctions over Russia’s war in Ukraine – was inevitably reflected when markets opened for business on Monday morning.
Europe’s main benchmark, known as the Dutch TTF, which has risen more than 400% in the past year, rose another 30%.
The contract for October delivery to the UK – which does not depend on Russia energy but exposed to broader market pressures – was 25% higher.
Equity markets also experienced turbulence with Germany’s DAX down nearly 2% following Russia’s move.
The FTSE 100 in London opened only 0.7% lower thanks solely to its strong range of energy components.
Normally, Nord Stream 1 brings a third of Europe’s supply from Russia.
Record prices, against a backdrop of limited gas flows from Russia during the summer, have already led some energy-intensive industries to cut production, notably in Germany.
Berlin on Sunday unveiled a 65 billion euro (£56 billion) package to help households and businesses meet the price challenge.
The measures, the third taken by Germany during the crisis so far, include tax breaks for manufacturers and subsidies for the lowest paid.
The UK is under increasing pressure to follow suit to better protect consumers and businesses from the worst effects of the cut in the cost of living.
Liz Truss, who should easily beat Rishi Sunak to the gates of number 10 when the result of the Conservative leadership race is said Monday at lunchtime, has promised to reveal details of her plans within a week if she wins.
The Bank of England has warned of an energy-related recession given forecast bills – which are expected to be well over £5,000 on an annual basis next year given the trajectory of wholesale costs.
Ms Truss argued during the leadership campaign that the recession was not inevitable.
Options for the next Prime Minister include tax cuts, new grants to help meet rising bills and a plan, similar to one revealed by Labor, that would freeze the price cap on energy.