The gas is flowing again! But an acute energy crisis has not been avoided at allwrites Esther Reichelt, foreign exchange and emerging markets analyst at Commerzbank.
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“The EU yesterday requested a significant reduction in gas consumption of 15% over the next eight months and threatens mandatory rationing. But the EU continues to drive the crisis almost blindly. Nor can the success of the measures be reliably estimated. savings, nor is it known what gas supply it will be able to draw on at all. The Russian president has already announced a further reduction in the volume of supply for next week, and a total supply freeze cannot be ruled out.”
“This means that a significantly higher euro risk premium is still justified. This is because the threat of a gas shortage places a double burden on the common currency. Even if rationing could be avoided, the economy faces a major structural shift away from cheap Russian gas, which will weigh on the eurozone’s growth and profitability prospects. At the same time, high gas prices are fueling inflation and reducing the purchasing power of the euro.”
Source: Fx Street
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