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The Euro, today, crashed down to its lowest value in the past 20 years as Russia shuts off its natural gas supplies. The Russian state provider of natural gas, Gazprom PJSC, announced on Friday that it will be shutting down the supply of natural gas from its Nord Stream pipeline, indefinitely. In response to this announcement, the European Union declared several measures to maintain the cost of living at a minimum and keep energy prices low.
Europe is already facing a fuel and energy crisis, which is expected to impact majorly as the winter is approaching. With Russia's announcement of shutting down the natural gas supplies to the continent, the value of the general currency and European stocks dropped significantly this weekend. This announcement has pushed the Euro down to the valuation of just US $0.9891. The shutdown of natural gas from Russia has created a fear of massive price hikes for fuel and energy. Because of this, for the first time in 20 years, the Euro has fallen to such a low valuation.
Gazprom, a leading supplier of natural gas, uses the Nord Stream 1 pipeline for supplying natural gas to Germany. From there, natural gas is supplied all over Europe. Almost a third of the total natural gas exported to Europe by Russia is exported using the Nord Stream pipeline. But, last week, the supply of natural gas was halted from the Nord Stream 1 pipeline as it was facing leak issues. The pipeline was then under maintenance with a time window of three days. But on Friday, Russia announced that on the grounds of technical difficulties, the Nord Stream 1 pipeline will be shut down indefinitely. This announcement sky-rocketed the prices of natural gas in Europe by almost 30%. As per the European Union, Russia is using its resources of natural gasses and petroleum for targeting Europe for the sanctions applied to Russia. To this, Russia has stated that the sanctions imposed by the Western countries have impacted its export of natural gas and have made the maintenance of the Nord Stream 1 pipeline difficult.
Previously, the natural gas supply from Russia to Europe, which uses the Ukraine route was halted on the grounds of war. This has left Europe with only one route and that was the Nord Stream 1 pipeline which comes through the Baltic sea. With the complete shutdown of these two routes, Europe has been cornered to face serious fuel and energy crises. As the winter is approaching, many European countries are looking after managing their available fuel sources effectively to last through the winter. Because of this, many production-based industries such as metallurgy and agriculture products industries, have reduced their production, resulting in job losses. This has forced the impacted countries to approve a significant chunk of their financial resources as relief funds for their citizens.
All of these events throughout the year have resulted in the fall of the Euro. As the countries are looking to increase restrictions on available fuel sources for rationing, the conditions for the Euro are expected to get even worse. The energy ministers of the countries under European Ministers are due to meet on Sep 9, 2022, for discussing the measures that can be implemented to improve the current situation. Only the meeting will tell about the future of the European fuel crisis and the state of the Euro.
Yash Ranjan09/07/2022
