(Bloomberg) — European gas prices rose after Austria’s OMV AG said Russia would cut fuel supplies from Saturday.

Gazprom PJSC has notified Austria that it will cut supplies to zero, according to an OMV filing. The shutdown comes after the Austrian energy company said on Wednesday it would stop payments to the Russian firm to recover a 230 million euro ($242 million) arbitration award.

The region’s benchmark contract rose as much as 2.7 percent, reversing earlier losses. Prices settled at their highest in about a year.

The Nov. 16 cap is a significant event even with Europe’s efforts to wean itself off Russian gas. Several countries, including Austria, remain key buyers of the fuel, which is transported through Ukraine under a transit agreement due to expire at the end of the year.

The shutdown means Austria will have to do without Russian supply sooner than expected and could have ripple effects in an already tight market. European gas prices have risen about 30% since the end of July as stocks are drawn down faster than usual due to cool weather and falling wind output.

“Prices are rising as the Austrian supply shutdown comes a few days earlier than expected, adding fuel to the fire,” said Florence Schmit, European energy strategist at Rabobank. “While the market is currently well-supplied, this shutdown means stronger winter storage draws will be needed, as well as higher demand for LNG.”

For now, nominations for Sudzha, a cross-border point on the Russian-Ukrainian border, show the usual level of flows for Saturday, data from Ukraine’s network operator shows. Russian gas flows to Austria through Ukraine and Slovakia.

Austrian energy regulator E-Control said authorities were monitoring the supply situation. “However, due to high storage levels and the possibility of replacement via other transport routes, it is assumed that the supply of gas to Austrian customers will remain secure,” it said in a statement.

Gazprom did not respond to a request for comment.

The announcement is a turning point for Austria, which has maintained one of Europe’s oldest and deepest connections to Russian energy and in 2018 extended a long-term gas contract until 2040. Much of the region has moved away from Moscow’s gas in recent years, with Austria – OMV’s domestic market – Hungary and Slovakia the largest importers of the remaining fuel.

OMV said it can meet supply obligations through other sources even if the long-term contract is terminated. Landlocked nations like Austria can access alternatives like LNG, which is more expensive and includes costs for regasification and moving it out of terminals.

Supply cuts are also occurring as cooler temperatures and lower wind power have led to accelerated withdrawals of gas from storage sites. This could leave less gas available for later in the winter when the heating needs to be taken over.

Stronger withdrawals would also make it more difficult to replenish stocks next summer. This kept prices for summer high compared to those for the coming winter.

Supply cuts, combined with cold weather, could support gas prices north of 47 euros per megawatt-hour in the near term, although underlying demand signals still look weak through 2025, Bloomberg Intelligence analysts Patricio Alvarez wrote on Friday. and Joao Martins.

The cost of hedging against rising prices during next year’s storage season has also increased. The implied volatility spread between Dutch options for April, when traders start stockpiling, and those for winter 2025, is now at its highest level this year.

Dutch front-month futures, Europe’s benchmark for gas, rose 0.7 percent in Amsterdam to 46.55 euros per megawatt-hour.

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