LONDON: The euro struck parity with the dollar for the first time in nearly 20 years on Tuesday as a cut in Russian gas supplies to Europe heightened fears of a recession in the eurozone.

The European single currency hit exactly one dollar — its lowest level since December 2002 — before bouncing back to as high as $1.0070.

Oil prices plunged on concerns of a wider recession as central banks hike interest rates to fight decades-high inflation, with both main contracts falling back under $100 per barrel at one point.

Global benchmark Brent crude tumbled to below $100 a barrel on Tuesday due to a stronger dollar, demand-sapping Covid-19 curbs in top crude importer China and fears of a global economic slowdown.

Brent crude futures were down by $7.62, or 7.1pc, at $99.48 a barrel by 11:04 a.m. ET (1504 GMT). US West Texas Intermediate crude was down $7.69, or 7.3pc, at $96.42.

While European stocks initially moved lower, they rallied in afternoon trading to finish higher. Wall Street’s main stock indices were also up in late morning trading.

“Rising inflation, stalling economic growth, and more recently fears that Russia could cut gas supplies have pulled the euro lower,” said Fiona Cincotta at City Index.

“The nail in the coffin today was dire data showing that economic confidence in Germany fell to a decade low,” she added.

Russian energy giant Gazprom on Monday began 10 days of maintenance on its Nord Stream 1 pipeline — with Germany and other European countries watching anxiously to see if the gas comes back on.

“The gas crisis has really spooked markets over the eurozone economy,” Markets.com analyst Neil Wilson told AFP.

Oil and gas prices have rocketed this year after economies reopened from Covid lockdowns and following the invasion of Ukraine by major energy producer Russia, which raised concerns whether supplies will be adequate.

Published in Dawn, July 13th, 2022