Statistics show that Nord Stream has been shipping 30 million cubic meters of gas per day, roughly 20% of its capacity, while European countries raced to fill their gas supplies for winter. Independent economist Julian Jessop noted that natural gas prices jumped after Russia indefinitely suspended Nord Stream 1. Meanwhile, a strategist at Saxo Bank, in a morning note, wrote that demand destruction caused by high prices did not dent demand for gas.
Muted response
Moreover, the G-7 finance ministers agreed on a plan to impose price caps on Russian oil exports to reduce the flow of funds to Putin’s regime, after which the news of the shutdown of Nord Stream surfaced. At the moment, Germany, Sweden, Finland, and others are passing relief packages for utilities struggling with sharply heightened collateral requirements, whose potential downfall could lead to wider economic repercussions and instability.
Central bank policy
On top of raging inflation, this new development will not make things easy for the European Central Bank, which is set to meet later this week where a rate hike was expected. Potentially, a rate hike of 0.75 percentage points would be the biggest since 1999 and is what the markets expect after the gas prices surged. Overall, Europe’s economic outlook has darkened once again, as rising gas prices could worsen the inflation situation. Growth expectations in the EU economies will have to be tempered according to gas flows through Nord Stream and possibly Norweigan gas pipelines, since a potential ‘gasout’ is threatening Europe’s biggest economies. Buy stocks now with Interactive Brokers – the most advanced investment platform Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.
