Strike in Norway threatens to intensify the energy crisis in Europe

The Norwegian trade union Lederne and its workers have announced the start of a strike, which threatens to worsen the crisis with natural gas supplies in Europe. As a result, Dutch natural gas futures rose by 10% on this news.

As you know, Norway is one of the largest oil and gas producers in the world, and a strike could lead to a reduction in gas production in the country by 13%, and oil production by 130 thousand barrels per day. To date, Norway provides from 20% to 25% of the needs of the European Union and the UK in natural gas.

It is also worth noting that about 15% of Norwegian offshore oil and gas workers are members of the striking Lederne trade union. The strikers are demanding higher wages to cope with rising inflation, which reached 5.7% in May — the highest level in the country since 1988.

Last week, members of the Lederne trade union voted against their proposed wage agreement. Other unions of the country's oil and gas industry accepted the agreement and refused to strike.

The situation is worsened by the fact that the strike is being held during the period of restrictions on natural gas supplies to Europe, since the Russian state gas giant Gazprom has reduced gas supplies to Germany via the Nord Stream-1 gas pipeline by 60% compared to last month (due to the delay in the supply of equipment to Gazprom from Canada).

Last month, Germany, Europe's strongest economy, already reduced gas consumption as part of its 3-stage emergency gas plan to abandon Russian gas. If the situation worsens, Germany may start rationing natural gas in accordance with the last stage of the plan, when the industry will be the first in line to reduce supplies. And such measures can destroy the country's economy and lead to job cuts.