Cutting off Russian gas will cost Germany 220 billion euros and trigger a European recession Business

Separately, Moody’s warned that difficulties in replacing Russian energy supplies, particularly gas, would lead governments to prioritize households, hospitals and transport for supply, forcing some manufacturers to cut production or close.

“The reduction in energy supplies from Russia would lead to a sharp drop in consumer and business confidence, which, combined with Europe’s trade ties (both within its borders and globally) , would likely lead to an economic recession in Europe and increase the risk of a global recession,” he added.

“Investor sentiment is likely to deteriorate, leading to a sharp weakening of funding conditions and triggering a general decline in asset prices. Credit spreads would widen sharply and liquidity would temporarily dry up, particularly affecting less expensive issuers. well-rated, which would lead to a sharp increase in defects.

Moody’s warned that an embargo would push oil prices to $160 a barrel this year, from $106.90 on Wednesday, while gas prices in Europe would rise “significantly” from already high levels and remain high for at least the next two years.

Hungary, Slovakia and the Czech Republic are the most exposed to a gas supply shock. Germany, Austria, Italy and Greece are heavily dependent on Russian gas but also more resilient economically, he added.

The EU is trying to reduce its reliance on Kremlin gas without imposing a ban, laying out plans to cut demand by two-thirds before the end of the year. However, limited global supplies and already high prices are proving difficult to overcome.

On Tuesday, Reuters reported that the EU was drafting proposals for an oil embargo against Russia, but said there was no agreement among member states to do so. Many foreign ministers have shown support for the decision, but for others it would be an “asymmetrical shock”, EU Foreign Minister Josep Borrell reportedly said.

The United States has banned Russian oil and Britain plans to do so by the end of the year, giving industry time to replace about 8% of total oil supply.