Gas prices likely to hit new highs as Russia shuts pipeline indefinitely

Analysts are expecting gas prices to surge to record highs this week after Russia shut down a key pipeline to Europe.

Many commentators warned that European prices, which have risen by nearly 400% over the past year owing to lower gas flows from Russia, would go up further when markets open on Monday after Moscow scrapped a Saturday deadline for flows to resume through the Nord Stream 1 pipeline to Germany, saying it had discovered a fault during maintenance.

In Britain, it was the case that about 4% of gas and 8% of oil was coming from Russia. However, it was confirmed a few days ago that Britain is importing no energy from Russia for the first time on record after trade between the two countries collapsed after the invasion of Ukraine.

European leaders have accused Russia of weaponising energy supplies around the invasion of Ukraine, while Moscow blames western sanctions and technical issues for supply disruption.

The Nord Stream 1 pipeline, which runs under the Baltic Sea to Germany, had supplied about a third of the gas exported from Russia to Europe, but was running at 20% capacity before flows were halted for maintenance last week.

The Russian state-owned energy company Gazprom had been expected to restart flows at 20% after the most recent stoppage, leading the benchmark Dutch TTF gas prices to fall back by about 40% from the record high on 26 August, closing at just over ¤200 (£173) per megawatt hour on Friday.

Record power costs linked to surging gas prices have already forced some energy-intensive industries, including fertiliser and aluminium makers, to scale back production and led EU governments to pump billions into programmes to help households.

About 13% of the businesses it surveyed said they were now cutting their hours of operation or avoiding production during peak energy price periods, and 7% were stopping production for longer periods. Meanwhile, 12% have already made job cuts.