European gas prices have surged 28% since Russia halted supplies to Poland and Bulgaria
gasprices soared Wednesday as Russia's Gazprom said it would fully halt supplies to Polandand Bulgaria.
- Russia's state-owned energy firm said both countries failed to make payments in rubles for
European gas prices surged on Wednesday, after Russia halted supplies to Poland and Bulgaria, stoking concern that other countries in the continent could be targeted for their support towards Ukraine.
Benchmark Dutch futures contracts tracking
That jump came as Russia's state-owned energy major Gazprom said it would "fully halt" gas supplies to Bulgaria's Bulgargaz and Poland's PGNiG "due to their failure to pay in rubles."
Both countries were informed that all flows would be stopped from Wednesday, April 27.
For more than a month, tensions have been rising between Western nations and Russia over the Ukraine war. President Vladimir Putin in March ordered "unfriendly countries" to pay for Russian gas using its official currency, even though these contracts are generally required to be paid in dollars.
Europe has leaned on Russia for decades because it's dependent on the country for around 40% of its gas supplies. Poland and Bulgaria are among other European nations that have rejected paying rubles for gas supplies, disputing that this would be a breach of contract and would avoid sanctions on Russia's central bank.
European Commission President Ursula von der Leyen said Wednesday that Gazprom's announcement is another attempt to use gas as an "instrument of blackmail."
"This is unjustified and unacceptable. And it shows once again the unreliability of Russia as a gas supplier," she said in a statement, adding that the bloc is working on alternate sources of delivery to ensure continued supply.
Poland relies on Russian gas for about 40% of its total needs, while Bulgaria relies on it for 99%, according to data from the Energy Information Administration.
The stoppage could be an incentive for the EU to work out a ruble payment mechanism "given the significant economic toll a halt in gas flows would have in the region," Goldman analysts led by Samantha Dart said in a note on Monday.
Others say the latest development is a sign the EU will soon finalize a wider embargo on Russian energy, after having said it would ban imports of coal in recent weeks.
"Energy is being increasingly weaponized as the war in Ukraine looks set to enter the long haul and expectations grow that a crude oil embargo will end up being slapped on Russia by the EU," Susannah Streeter, senior
"If Russia's customers continue to refuse to sign contracts in rubles, and accelerate efforts to find other sources of energy as they have pledged to do, these revenue streams risk turning into a trickle putting fresh pressure on the ruble," she added.
In the last 12 months, benchmark Dutch natural gas futures have soared by over 400%, while UK futures have risen 185%, squeezing consumers across the continent and thrusting millions into fuel poverty.
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