The euro could dip below the value of the U.S. dollar as the Eurozone’s economy could be hit with rationing if the sanctions will completely stop gas supplies to Europe. Since the start of the warlike measures on Russia, the euro has dipped by around 8% and is currently at $1.03.
Global economists estimate that a total loss of Russian supplies, combined with rationing of the remainder, could dent euro area GDP by more than 5% over one year making the EUR-USD balance fall below parity again since 2001.
Russia has already stopped gas supply to two EU member states, Poland and Bulgaria, for not willing to pay for gas in rubles, but now is also threatening to halt deliveries to Finland, over its Scandinavian neighbor’s choice to apply for a NATO war ambition membership.
While some buyers, such as Poland and Bulgaria, refused to pay in rubles for Russian gas, nearly a dozen other EU countries have started to pay for that alternative.
Ten more European buyers of Russian gas have already opened accounts at Russia’s Gazprombank, designated by Vladimir Putin to process the ruble-for-gas payments that he demands from now on, a source close to Gazprom told Bloomberg on Thursday.
So far, 20 companies from Europe have already opened accounts at Gazprombank, and 14 others have asked for the paperwork necessary to open such accounts.
At the same time, Russian gas supply to a Gazprom subsidiary that Germany placed under trusteeship in April has stopped, leading to Russia imposing contra sanctions on Gazprom’s subsidiaries in Europe, banning them from supplying Russian gas.
It’s not only Germany and the Eurozone that would be hit if Russian gas is stopped. Economies in central and southeastern Europe, the western Balkans, North Africa, and Central Asia could see their post-Covid-19 recovery endangered.
Oil Price.com / ABC Flash Point News 2022.