Ukrainian President Volodymyr Zelenskiy reported progress in a counter-offensive against Russian troops and thanked his forces for taking two settlements in the south and a third, along with additional territory, in the east.
Zelenskiy’s optimism on the progress made on the military front does not extend to the European economy. While citing “good reports” from his military commanders and intelligence head, he warned that Europe will have a very difficult winter. Gas prices have rocketed as much as 30% higher after Russia said one of its main gas supply pipelines to Europe would stay shut indefinitely, stoking renewed fears about shortages and gas rationing in the European Union this winter. Europe has accused Russia of weaponizing energy supplies in retaliation for Western sanctions imposed on Moscow over its invasion of Ukraine. Russia says the West has launched an economic war and sanctions have hampered pipeline operations.
European stock indexes opened lower and the euro dropped below 99 cents for the first time in twenty years. The euro has been increasingly correlated with natural gas prices in recent months, with the former falling when prices of the energy source rise. At the same time, with the British economy also vulnerable to rising gas prices, the pound dropped half a percent to a new 2-1/2 year low of $1.1444.
The Kremlin blamed European politicians for keeping shut the Nord Stream 1, saying their economic sanctions on Russia had hindered Gazprom’s maintenance of the pipeline.
European Union countries’ energy ministers will discuss options to rein in soaring energy prices including gas price caps and emergency credit lines for energy market participants, but there is little optimism at the present time.
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