European stocks closed in the red on Monday as the closure of the Nord Stream 1 gas pipeline deepened the energy crisis, sending equities and the euro tumbling.
"It seems energy is Russia’s big weapon in the ongoing war with Ukraine," Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, said.
"Turning off the gas taps appears to be a response by Russia to a planned price cap on its oil, designed to cause blackouts and rationing and further financial pain for companies and consumers across Europe."
Russia on Monday warned that it won't resume gas supplies to Europe until western sanctions are lifted.
Kremlin spokesman Dmitry Peskov, blamed the "collective west" for its decision to shut down flows through the crucial Nord Stream pipeline.
He told the Interfax news agency: "The problems pumping gas came about because of the sanctions western countries introduced against our country and several companies.
"There are no other reasons that could have caused this pumping problem."
On Friday, Kremlin-controlled gas company Gazprom (GAZP.ME) indefinitely shut off the Nord Stream pipeline after three days of maintenance, blaming an oil leak at a gas turbine that helps pump the fuel into the pipeline.
Over the weekend, both Sweden and Finland created emergency backstops to help energy firms struggling with surging prices.
It comes after the G7 and the EU also agreed on a global price cap on purchases of Russian oil in a bid to ease the global energy crisis and slash the Kremlin's revenues.
While Britain is not as reliant on Russia for gas, the energy crisis is likely to worsen as wholesale price rises trickle into UK prices.
That saw European gas prices skyrocket as much as 35% since Friday. While the UK-month ahead gas price for October rose by 25%, to 513p per therm, towards the five-month highs of nearly 650p set last month.
Chris Beauchamp, chief market analyst at online trading platform IG, said: "Stocks are deep in the red across Europe, despite some trimming of losses.
"Once more, oil prices have come to the rescue of the FTSE 100, with the index looking to end this relatively uneventful session flat on the day. OPEC’s talk of a modest cut to production has provided the spark for another bounce in oil prices."
Oil prices surged nearly 4% as the Organisation of Petroleum Exporting Countries and its allies (OPEC+) agreed a token supply cut to lift oil prices.
Meanwhile, the euro (EURUSD=X) has plummeted against the dollar as the energy crisis threatens to push the bloc into recession.
The common currency fell below 0.99 cents for the first time since December 2002, down 0.7% to $0.9884 in early trading.
Across the Atlantic, US benchmarks fell for the third week in a row amid concerns that the Federal Reserve's path of rate increases could push the economy into a recession.
US indices were closed on Monday for Labor Day.
Asian stocks finished in mixed territory overnight as US-China tensions and news of fresh COVID lockdowns in China rattled markets.