The cost of buying electricity in Europe went up to a record high on Wednesday after Russia cut the flow of natural gas into the country.
The benchmark European price for German power shot up to a record 388 euros per megawatt hour on Wednesday, more than 400% higher than a year ago. The gains were trimmed a bit.
Europe's natural gas prices rose for the sixth day in a row as Russia continued to choke off supplies.
The Dutch TTF natural gas futures were 2% higher on Wednesday. It was more than 26% higher than Friday's close and 780% higher than a year ago.
The supply of natural gas into Germany and Europe will be slashed by 20% due to a technical issue with a turbine, according to Russia's Gazprom.
The data shows that flows through the line dropped to 20% of capacity.
Russian President Vladimir Putin has been accused of using natural gas as an economic weapon in response to sanctions against him.
Analysts said that the latest cut in Russian natural gas supplies to Europe would have a huge blow to the region's economy.
"This will see electricity turning from a utility into a luxury good for many Europeans, while it severely damages industrial competitiveness even before any more heavy-handed decisions to ration energy use will be made," said the senior macro strategist at Rabobank.
The eurozone is expected to fall into recession in the second half of the year, according to Goldman.
"Decreased supply of Russian gas and high gas prices are set to weigh on activity in the coming quarters," the bank's analysts said.
During the winter months, a complete gas supply stop is still possible. It is estimated that a stop would push the euro area into a recession.
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