European natural gas prices soar 17% after Russia says it will slash supplies to the continent, driving fears of a deep recession

The price of natural gas in Europe has gone up over the last two days after Russia said it would cut supplies through the Nord Stream 1 line.

Dutch TTF natural gas futures for August, the benchmark European price, rose sharply on Monday after Russia announced it.

According to the data from the ICE exchange, it jumped again on Tuesday to around 190 dollars permegawatt hour. The closing price of around 160 euros was the highest since March.

Natural gas prices in Europe have risen for four days in a row and are more than 70% higher than a year ago.

Fears that Europe could fall into a recession due to high energy prices are being driven by the cuts to supplies and the increase in prices.

The GDP of the eurozone is now expected to shrink in 2023, according to economists at Credit Suisse.

The economists at the bank said they expect the largest contraction in Germany and Italy because of their dependence on Russian gas.

State-owned Russian energy company Gazprom said on Monday it would cut natural gas flows to 20% of capacity on Wednesday, having already slashed shipments to 40% of normal levels.

The company said it needs to carry out maintenance work due to the sanctions. European leaders accuse Russia of using natural gas as a political tool.

US shipments of super-cooled liquified natural gas to Europe have increased this year, as consumers in the region have scrambled to find alternative sources of supply. The United States became the world's biggest exporter of liquified natural gas in the first half of the 21st century.

Tensions in Europe have not been this high since the Cold War.

Peter Sidorov told clients that the cuts were in line with the baseline of an on-off supply scenario. The eurozone will probably suffer a mild recession in the second half of the century.

There are issues with a turbine that is crucial to the operation of the NS1 line, which sends gas from Russia into Germany.

The analysts at Goldman said they expect flows to return to 40% of normal levels once another turbine is restored.

Russian supply uncertainty is high according to them.