When Russia shut down the Nord Stream 1 pipeline for repairs 10 days ago, European governments, economists, and investors were all worried that it was just a pretext to cut Ukrainian allies’ natural gas supplies again, and that the flow of gas might not resume even after maintenance was over.
Europe – and particularly Germany – would’ve been facing a very challenging winter without the pipeline. If the region wasn’t able to store enough gas ahead of the winter, there might not have been enough to heat businesses' offices and consumers' homes. The only solution would have been rationing, which would no doubt have had a major impact on the region’s economy. In that scenario, European stocks, bonds, and the euro would’ve come out of the situation bruised and battered.
Woulda, coulda, shoulda: we just got confirmation that Russia resumed its gas supplies today. But while the worst-case scenario is off the cards for now, it doesn’t mean that Europe is in the clear just yet. Russia had already cut supplies by 60% before the maintenance, and shipments have only returned to 40% capacity. More importantly, Russia still holds all the cards: it could decide to cut supplies even more (or completely) if it sees fit. So you should allow yourself to be cautiously optimistic, sure, but don’t forget about the “cautiously” bit.
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