Europe has accused Russia of weaponising energy supplies in what Moscow has called an "economic war" with the West over the fallout from the Ukraine conflict, while Moscow blames Western sanctions and technical issues for supply disruptions.
The Nord Stream pipeline, which runs under the Baltic Sea to Germany, historically supplied around a third of the gas exported from Russia to Europe, but was already running at just 20 per cent of capacity before flows were halted last week for maintenance.
Expectations were high Russia's state-controlled energy giant Gazprom would restart flows at 20 per cent after the latest stoppage, leading benchmark Dutch TTF gas prices to fall back around 40 per cent from Aug. 26's record high to close at just over 200 euros per megawatt hour on Friday.
But after Russia scrapped a Saturday deadline for flows to resume, saying it had discovered a fault during maintenance, prices are likely to surge again, analysts said.
"On Friday... the market was already pricing in Nord Stream 1 (NS1) flows coming back," Energy Aspects gas analyst Leon Izbicki said. "We expect a significantly stronger open for the TTF on Monday."
Sky-high power costs linked to surging gas prices have already forced some energy-hungry industries, including fertiliser and aluminium makers, to scale back production, and led EU governments to pump billions into schemes to help households.
The impact of the latest cut would depend on Europe's ability to attract gas from other sources, Jacob Mandel, senior associate for commodities at Aurora Energy Research, said.
"Supply is hard to come by, and it becomes harder and harder to replace every bit of gas that doesn't come from Russia," he said.
Germany has begun developing liquefied natural gas (LNG) terminals to enable it to receive gas from global suppliers and move away from Russian gas imports.
"There's plenty of scope to replace that (Russian) gas with LNG imports for now, but when the weather turns cold and demand starts to pick up in the winter in Europe and Asia, there's only so much LNG out there that Europe can import," Mandel said.
Izbicki said prices would need to reach an average of 400 euros per MWh between September 2022 and end-October 2023 to encourage enough sellers to send gas to storage for the EU to meet its targets for next year ahead of winter 2023.
Russian gas is still currently flowing to Europe through pipelines via Ukraine, but speculation is now mounting over whether that too could be halted.
"We're shifting focus to the (gas) ... that continues to flow to Europe through Ukraine," James Huckstepp, EMEA gas analyst at S&P Global Platts, said in a Twitter post. "Only a matter of time..."
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