Russia to shut off its main gas supply pipeline to Europe

European gas prices rocketed as much as 30% higher on Monday and the European Union’s common currency fell below 99 cents for the first time in 20 years after Russia said it would shut off its main gas supply pipeline to the continent indefinitely

The benchmark gas price surged as high as 272 euros per megawatt hour (MWh) when the market opened, which is almost 400% higher than a year ago.

The EU’s common currency, euro, was trading around 0.9915 versus the dollar by 1:00 p.m. London time (8:00 a.m. ET), having climbed off lows of $0.9881 hit earlier in the day.

The developments came after Gazprom, Russia’s state-run gas monopoly, said Friday that a leak in Nord Stream 1 pipeline equipment meant it would stay shut beyond last week's three-day maintenance halt.

Since Moscow commenced its “special military operation” in Ukraine on February 24, the United States, Canada and their European allies have imposed waves of unprecedented sanctions on Russia, despite the Kremlin’s repeated warnings that such measures would only prolong the war.

For its part, Moscow began to significantly reduce its gas deliveries to Europe through the Nord Stream 1 pipeline, prompting the European Union to strive to boost gas imports from elsewhere amid a worsening energy crisis in the continent.

The Nord Stream pipeline, which runs under the Baltic Sea to Germany, historically supplied about a third of the gas Russia exported to Europe but it was already running at just 20% of capacity before flows were halted last week for maintenance.

Russian gas being supplied via Ukraine, another major route, has also been reduced, leaving the EU racing to find alternative supplies to refill gas storage facilities for winter. Several states have trigger emergency plans that could lead to energy rationing and raising prospects for a recession.

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