President Vladimir Putin threatens to shut off all energy supplies if the European Union placed a price restriction on Russian gas on Wednesday, increasing the possibility of rationing this winter in some of the richest nations in the world.
The increasing conflict might increase already exorbitant European gas prices, adding to the already staggering costs that EU governments are bearing to keep their energy providers from going out of business and save cash-strapped customers from freezing in the upcoming winter.
In retribution for Western sanctions against Moscow over its assault on Ukraine, Europe has condemned Russia for turning energy supplies into weapons. Russia attributes the gas supply issues, which it attributes to pipeline defects, to the sanctions.
Putin warned the West it feared being frozen like the wolf’s tail in a well-known Russian fairy tale as tensions increased by saying contracts may be pulled up in the case of price limitations.
However, the EU intends to move through with a cap on the price of Russian gas as well as a ceiling on the cost of energy generated by non-gas generators.
On Friday, an emergency meeting of EU energy ministers is scheduled.
A proposal for a rate ceiling on Russian gas will be made. According to Ursula von der Leyen, president of the European Commission, they want to reduce Russia’s profits, which are used by Putin to pay for the horrifying conflict in Ukraine.
A source with access to the situation told Reuters on Wednesday that the Netherlands, which has historically opposed a gas price ceiling, would back one that specifically targeted Russian gas.
A Czech minister had earlier suggested that it be removed from the meeting’s schedule for Friday. As the current owners of the EU’s rotating presidency, the Czechs are assisting in directing debates.
Putin foresaw the move and threatened retaliation.
In Vladivostok, Putin stated that they won’t supply anything at all if it conflicts with their interests.
He added that they will not supply gas, oil, coal, heating oil, or anything else. He also challenged a grain export agreement from Ukraine that was mediated by the UN.
The EU’s proposed cap on the cost of energy produced by non-gas generators would be set at 200 euros each megawatt hour, according to Eurelectric, a group that represents the European electricity sector.
The dependence on imported fossil fuels and a lack of gas supply are the main causes of the issue. Kristian Ruby, the Secretary General of Eurelectric, argued that instead of making sporadic, destructive interventions in the electricity market, governments should work to address this issue.
Analysts, however, saw the level of the quota as a better-than-expected conclusion for the industry, and European utility stocks rose on the news.
The energy crisis that Europe is now experiencing has gotten worse when Russia’s Gazprom (GAZP.MM) completely stopped supplying gas to Germany via the Nord Stream 1 pipeline after discovering an engine oil leak last week while performing maintenance.
The pipeline’s non-operation was allegedly caused by Germany & Western sanctions that restricted the delivery of parts, according to the Russian president.
Companies are being forced to reduce production as a result of the price increase, and governments are being forced to spend billions on assistance programmes to protect consumers.
The cost of a price freeze is anticipated to reach 100 billion pounds, and newly-crowned Liz Truss, the British Prime Minister is set to announce her plans on Thursday.