- The euro dropped to a 20-year low while the US dollar reached as low as $0.99 as gas prices in Europe surged by 25% on Monday. This comes as Russia's state-owned Gazprom announced that it will not reopen its main gas pipeline to the region.
- Concerns about the possibility of a recession have increased in the UK and the EU and as a result, their currencies have weakened as investors shift to the US dollar.
- Russia has applied pressure on European nations by controlling gas supplies in response to restrictions imposed on the country following its invasion of Ukraine. The Nord Stream 1 pipeline connecting Russia to Germany was shut down on Friday by Gazprom, the state-owned gas corporation in Russia, which claimed to have discovered a leak that needed to be fixed.
Why it matters
Nearly 40% of Europe's natural gas supply came from Russia but gas flow reductions and frequent outages have impacted the already unstable market. Europe is now experiencing an energy crisis due to rising costs and diminishing reserves, and nations worry that a harsh winter with energy restrictions is coming.