Winter is coming... Markets were shocked on Friday after Russia indefinitely shut down natural-gas flows to Europe. Kremlin-controlled Gazprom (the biggest natural-gas company) halted gas supplies to Germany from the Nord Stream 1 pipeline, a key gas artery for Europe. It’s a worst-case scenario for Europe as it races to fill gas-storage facilities to keep homes warm this winter.
Putin-flation... Gas prices have been falling for months, but they spiked after Russia turned off the taps (and the euro hit a 20-year low). Not helping: OPEC agreed to cut oil production next month. Nord Stream is key for Europe and its largest economy, Germany. But ever since Russia invaded Ukraine, the EU’s had to wean itself off the pipeline.
Energy is a powerful weapon… and it doesn’t have to be nuclear. By zapping Europe’s gas supply, Russia is attacking its economic heart. A winter shortage could tip Europe’s ailing economy into a full recession — and cause a collapse in energy trading. Fortunately, Europe’s gas-storage levels have surged ahead of targets, which could help it avoid having to ration. But consumers and the economy could take a major hit from record prices.