For a few days now, there have been various flashes relating to the gas supply reduction to some European countries especially Germany. Gas imported from Russia accounts for 32% of total German gas imports. The gas storage level is at 58% currently which is sufficient for the summer but will become a major cause of worry in winter.
This was triggered by Europe as the announced energy embargo from Russia by this year's end. To further escalate the issue Gazprom (Russian Gas supplier) local unit was taken over by the German government and is being provided funding assistance of $10Bn. This was taken as practical aggression by Germany against Russia and the response to it has been very practical as well.
The surprise element is the timing of it, as most European countries thought that Russia would not reduce the supply in the summer months and that would give them enough time to fill up the storage level to be less dependent in winters when the embargo takes effect. Little did they know that Russia would act in such a manner and reduce the supplies in the summer months itself. And to make matters worst Nord Stream 1(Main gas pipeline) is going for maintenance work from July 11 with no hint that supplies will restart once finished.
This has caused a severe level of panic in Europe and has them to strategies contingencies in case the supplies do not restart. To start with Germany has initiated stage 2 of the emergency plan that would focus on curtailed usage of the gas, especially by the industry.
The next few months become very crucial for Germany and Europe as the gas supply reduces and the activity restrictions would be imposed the recessions probabilities escalate with no quick solution. This would be after decades that a recession would be triggered by energy supply issues.