Fear of Russian retaliation leads several countries to oppose EU plan to hit Moscow with gas price cap

Europe wants to set a limit on the price paid for natural gas from Russia, but the proposal faces rejection of the countries worried that Moscow will fight back by completely cutting off fuel supplies.

At least 10 of the 27 members of the European Union want the price limit wholesale applies to all gas suppliers through gas pipelines, and not only to Russia: among them are Poland, Greece and Italy, according to reports Financial Times this Friday.

They are concerned that President Vladimir Putin could completely cut off gas supplies to Europe in retaliation for the fact that the EU has singled out Russia in the plan.

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“Frankly, the Russians are likely to retaliate”admits the main energy adviser of the Greek leader to the medium.

For his part, the foreign minister of Hungary — a country that gets most of its oil and gas from Russia — has warned that turning to Moscow would provoke a swift response.

“If price restrictions were imposed exclusively on Russian gas, there would obviously be an immediate cut off of the Russian gas supply. You don’t need a Nobel Prize to recognize it,” said Peter Szijjarto in a video on Facebook.

The headwinds to the proposal come as EU ministers meet urgently this Friday 9 to discuss the energy crisis plaguing Europeafter Russia indefinitely cut off gas supplies through the key Nord Stream 1 pipeline. They are likely to only broach the plan briefly, according to Financial Times.

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The proposal to cap gas prices is part of a package of EU measures to relieve households and businesses of rising energy costs and secure fuel supplies before winter demand surges.

Natural gas prices in Europe have risen sharply since Russia’s invasion of Ukraine in February, as the country cut gas flows to the continent in response to Western sanctions imposed.

Dutch TTF Futures they have since retreated, down nearly 4% to just over €211, as governments step up efforts to cut costs through price caps. In August they reached an all-time high of 340 euros per megawatt hour.

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Given cost pressure, Belgium wants to see an EU-wide dynamic price cap for gas traded on exchanges linked to Asian marketsdeclared its energy minister to Reuters before the meeting.

“Our intention is first and foremost to lower prices. A cap on Russian gas alone will not lower prices.. A cap on Russian gas alone is purely political,” Tinne van der Straeten defends.

Putin has criticized this Wednesday the 7th the EU plan, calling it “stupid” and claiming it would only lead to higher prices. At the same time, the Russian leader has threatened to exclude all current buyers who adhere to Western price caps for their energy exports.

“Will there be any political decisions that contradict the contracts? Yes, we simply will not fulfill them. We will not supply anything at all if it contradicts our interests,” Putin said: “We will not supply gas, oil, coal, heating oil: we will not supply anything”.

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Fear of Russian retaliation leads several countries to oppose EU plan to hit Moscow with gas price cap