Europe is eyeing a price cap on Russian natural gas imports as Moscow threatens to keep energy supplies squeezed

• The EU's energy agency is calling for a wholesale price cap on Russia's gas supplies, as power costs soar.
• It would limit prices EU-wide for Russian gas, which could be cut off if sanctions aren't lifted.

Europe is looking to set a price cap on Russian wholesale natural gas, as Moscow turns up the pressure in a worsening energy crisis that has engulfed the region.

The European Commission's energy agency has urged EU member countries to bring in "emergency wholesale price cap" measures to manage gas supplies, and it has put forward the Russian plan as one option, the Financial Times reported Monday.

Since Russia invaded Ukraine, European energy prices have skyrocketed after Moscow curbed supply to countries in the region, in apparent retaliation to Western sanctions.

The gas price cap is part of a package of proposals meant to provide relief to households and businesses grappling with soaring energy costs, according to the commission's president.

"Putin is using energy as a weapon by cutting supply and manipulating our energy markets," Ursula von der Leyen tweeted. "He will fail. Europe will prevail."

A Kremlin spokesman said Monday that Russian natural gas supplies to Europe via Nord Stream 1 would not resume until the "collective West" lifts sanctions against Moscow.

On Friday, state-energy giant Gazprom said Friday that Russia's natural-gas flows to Europe via Nord Stream 1 would remain shut down indefinitely, claiming it found a gas leak. The flows were already running at only 20% of the key pipeline's capacity.

That indefinite halt sent European benchmark Dutch natural-gas futures surging by as much as 36% in just one session on Monday. Prices have jumped more than 300% this year and reached a record high above $340 euros per megawatt hour in August.

The EU is prepared to strike back if Russia continues to slash energy exports to the bloc, its economics commissioner said at the weekend. Other top European officials have accused Russia of taking advantage of Europe's reliance on its gas to retaliate against Western sanctions over the Ukraine war.

EU member states will examine the proposed measure, which would set a limit on what local buyers can pay wholesale for gas imports from Russia. A second option would bring in a system of caps that vary from country to country, depending on how they generate and use energy, per the FT.

But the energy agency did note that imposing a price cap could trigger "force majeure" clauses in company contracts with Russia's Gazprom, as well as a "possible escalation of geopolitical tensions," the report said.

Ministers from the G7 countries last week agreed to back a price cap on Russian oil to reduce Russian revenues from sales of gas and oil, which have thrived despite sanctions. Moscow has threatened to choke off its oil supplies to countries that abide by the cap, if it is imposed.

Dutch TTF gas futures were down about 12% on the ICE index at 220 euros ($218.35) per megawatt hour at last check Tuesday.