Barclays warns of sub-parity euro, 5 ppt GDP strike if Russia turns off fuel faucets


By Marc Jones

LONDON (Reuters) – Analysts at Barclays have warned of a 5 proportion point strike to euro zone GDP and a dive beneath dollar parity for the euro if Russia closes its gasoline faucets as component of the escalating war in Ukraine.

Worries are mounting in Europe that Moscow could sharply cut down the total of fuel it supplies or even prevent it completely as tensions rise and sanctions intensify around its assault on Ukraine.

The Kremlin has already lower off supplies to Bulgaria and Poland and this 7 days sanctioned Gazprom’s European subsidiaries which include Gazprom Germania, prompting Germany’s Economy Minister Robert Habeck to alert of no a lot more gasoline from Russia.

“If Russia closes its gasoline taps (to Europe), we count on EURUSD to tumble beneath parity,” Barclays stated in a note on the increasing tensions.

The euro is now at $1.03, getting slumped all-around 8% in the previous three months.

“Our economists estimate that a total loss of Russian materials, blended with rationing of the remainder, could dent euro area GDP by much more than 5 percentage points around one particular year”.

Strain is now on Europe to protected alternate gas provides effectively just before the wintertime sees temperatures fall once again.

The EU is presently grappling with Russia’s demand from customers that international locations start out paying for their fuel in roubles alternatively than euros or dollars as they ordinarily have.

Bowing to these types of a demand from customers could imply international locations properly breach their individual sanctions introduced in opposition to Russia as section of a co-ordinated move by the West to punish Moscow for its “special military operation” in Ukraine.

A recent report by credit score ratings huge Moody’s warned that a halt to the energy trade amongst Russia and Europe would lead to recessions all around the earth

About 25% of the practically 4,000 non-economical firms Moody’s analyses globally would “face major stress” it explained, despite the fact that it would be a drastically bigger 40% in the Europe Middle East and Africa (EMEA) region.

It “will lead to significant anxiety all over the world” Moody’s stated.

(Reporting by Marc Jones modifying by Dhara Ranasinghe and Kim Coghill)


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