Europe energy jumps as latest Russian gas cut plan stokes fear

European natural gas surged to about 15 times the average summer time price and power smashed through records as the threat of Russian supply cuts ripped through the market and threatened to push the German economy into recession.

Benchmark gas futures rose as much as 21%, while German power surged to above 700 euros a megawatt-hour for the first time. The key Nord Stream gas pipeline will stop for three days of maintenance on Aug. 31, again raising concerns that the link won’t return to service as planned after the works. Europe has been on tenterhooks about shipments through the link for weeks, with flows resuming only at very low levels after it was shut for works last month.

European authorities have repeatedly raised the possibility of a complete shut down of Russian supplies as the Kremlin retaliates for sanctions imposed because of its war in Ukraine. That would jeopardize the region’s plan to stash away enough gas for the winter and put huge stress on major economies, while households and industries would be left with large bills.

“The catastrophe is already there,” Thierry Bros, a professor in international energy at Sciences Po in Paris, said. “I think the major question is when EU leaders are going to wake up.”