Major Russia state-owned gas supplier Gazprom informed Polish gas company PGNIG on Tuesday that it will halt supplies of gas as of 0800CET on Wednesday, a breach of the Yamal contract, PGNIG said according to Reuters. 

PGNIG said it will take steps to reinstate the flow of gas according to the Yamal contract, adding that it is prepared to obtain gas from various other sources, including gas connections on the west and south of the Polish border. 

PGNIG said it is in touch with the Gaz-system and companies are monitoring Gazprom's decision to cease gas supplies. 

Bloomberg framed the news as a "major escalation in the fight between Moscow and Europe over crucial energy supplies", noting it comes against the backdrop of a standoff between the two sides over Russian demands for gas payments to be made in roubles. 

Market Reaction

Once the reports of Russia halting gas flows to Poland as of Wednesday started doing the rounds on Twitter and in the financial press, markets started to move on the story. WTI recently rallied to session highs in the mid-$102.00s, while the S&P 500 is currently trading at session lows and testing 4200. The DXY is also remains firmly on the front foot and at its highest levels since March 2020 in the 102.20 area.