European Gas Supply

Russian state-controlled energy company,?Gazprom, announced on September 2?that, for the time being, it would cease gas supplies to Europe via the Nord Stream 1 pipeline.

Gazprom claims the stoppage is due to an oil leak in the pipeline and that all equipment must be taken offline until the leak is repaired. However, Siemens Energy, the company responsible for repairs, has claimed that historically this type of repair should not result in a complete shut down of the pipeline.

This comes as Russian gas supplies to Europe have been significantly depleted over the last several months, which Europe has served in retaliation to sanctions following the Russian invasion of Ukraine. Russia, meanwhile, has stated that sanctions and economic pressures have made operations and repairs difficult, leading to a decreased supply and occasional shutdown of key supply lines like the Nord Stream 1.

Gas prices in Europe increased approximately 400% compared to last year, contributing to the cost-of-living crisis and other economic woes following the COVID-19 pandemic and the ongoing conflict in Ukraine. European Union countries are desperately moving to arrange alternative sources of energy and gas supplies before the start of winter when demand will increase and prices are likely to skyrocket further.

Industries with high energy usage have already been forced to pull back operations to conserve energy. Reduced economic operations coupled with fears of emergency energy rationing and other ongoing market pressures paint a rather grim financial picture for Europe in the near term.

With prices likely to continue to rise and the cost-of-living crisis likely to worsen, there is currently an elevated risk of widespread social unrest. The risk will continue to increase as we draw closer to winter and is dependent on what continues to occur with gas supplies from Russia.??

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