European natural gas surged to about 15 times the average summer time price and power smashed through records as the threat of Russian supply cuts ripped through the market and drove inflation expectations ever higher.

Benchmark gas futures rose as much as 20 per cent, helping drive up electricity and coal. The key Nord Stream gas pipeline will stop for three days of maintenance on Aug. 31, again raising concerns that the link won’t return to service as planned after the works. Europe has been on tenterhooks about shipments through the link for weeks, with flows resuming only at very low levels after it was shut for works last month.

European authorities have repeatedly raised the possibility of a complete shut down of Russian supplies as the Kremlin retaliates for sanctions imposed because of its war in Ukraine. That would severely jeopardize the region’s plan to stash away enough gas for the winter and likely push major economies, including Germany, into recession, while households and industries would be left with huge bills.

Germany warned Moscow could further reduce gas supplies, and reiterated a call to conserve energy. “We have a very critical winter right in front of us,” German Economy Minister Robert Habeck told public broadcaster ZDF in Montreal, during a visit to Canada with Chancellor Olaf Scholz. “We must expect Putin to further reduce gas.”

On Friday, Gazprom said works are needed in the only functioning turbine that can pump gas into Nord Stream. The pipeline has been operating at only 20 per cent capacity for weeks and European politicians insist the curbs are politically motivated. Russia’s Gazprom PJSC said volumes would return to that level following the latest shutdown. 

“Whether the reasoning is true or not, the outcome drives a European gas market that tightens further, and one that is left reliant on demand curtailments to find itself in balance,” said Biraj Borkhataria, an analyst at RBC Capital Markets. “The market may disregard Gazprom’s comments and start to consider whether the pipeline may not return to service, or at the very least may be delayed for any given reason.”

The Dutch front-month contract, the European benchmark, was 19 per cent higher at 292 euros a megawatt-hour at 2:41 p.m. in Amsterdam. It rose for a fifth straight week on Friday, the longest run this year. The UK equivalent surged 23 per cent on Monday.

Benchmark German year-ahead power rose as much as 26 per cent to a record 705 euros per megawatt-hour, while the French contract jumped 16 per cent to 840 euros. Coal futures also hit unprecedented levels. The near-term electricity market’s tightness is being compounded by nuclear reactor availability in France at near the lowest in years.

Over the weekend, German leaders said the country may struggle to replace dwindling gas supplies from Russia. The government is targeting a 20 per cent reduction in consumption. While the country is one of the worst hit by Moscow’s cuts with the economy on the bring of a recession, the energy crisis has reverberated through Europe.