The Norwegian government has stepped in to end a strike that had threatened supplies of gas to Britain.
The labour dispute had shut down oil and gasfields and was expected to cut Norway’s gas supplies by almost 60% by the weekend.
Gassco, Oslo’s state-owned pipeline operator, had even warned that “in a worst-case scenario, deliveries to the UK could stop totally”.
Workers demanded a pay increase to handle rising inflation, which has been triggered in part by a jump in oil and gas prices since Russia’s invasion of Ukraine.
However, the Norwegian government has the power to intervene to end industrial disputes. The country’s labour minister, Marte Mjøs Persen, said: “When the conflict can have such great social consequences for the whole of Europe, I have no choice but to intervene in the conflict.”
Gas prices had soared in recent days as the strike action threatened to exacerbate the existing supply crunch, but their rally was halted on Wednesday after the announcement.
European nations have been scrambling to fill their gas storage sites before the winter for fear that Russia will cut off supplies altogether.
Britain sources about a third of its gas from Norway and the remainder from a combination of the North Sea, other parts of Europe and imports of liquefied natural gas from the rest of the world, including the US.
Germany is far more reliant on Russian gas and fears are growing over the knock-on effect of Russia reducing gas supplies. The key Nord Stream 1 gas pipeline from Russia into Germany is also scheduled for maintenance from 11 July to 21 July.
The Deutsche Bank analyst Jim Reid said: “Economy minister [Robert] Habeck has talked about gas as potentially being a Lehman Brothers moment, so the stakes are high. Indeed, this is a heavy cloud hanging over European assets at the moment.”
Samuel Tombs, the chief UK economist at Pantheon Macroeconomics, said Britain could cope without Russian gas. He said: “The small hole that will be left by Russian imports falling to zero by the end of this year – as the UK government has pledged – should be covered easily by a pickup in liquefied natural gas imports from the US and Qatar.”