BRUSSELS. Natural gas futures prices in Europe jumped more than 23 percent when trading began on Wednesday morning, hours after Russia’s state-owned Gazprom told Poland and Bulgaria it was cutting fuel supplies.
Gazprom’s move came just as the United States and its allies agreed to send more weapons to Ukraine to help the country defend its territory from Russian invasion.
The reaction of the market underlined that the decisive, terrible moment of the war had arrived: a serious disruption of Russian natural gas exports to the European Union.
Poland and Bulgaria are heavily dependent on Russian gas exports, as is Germany, which is the de facto economic and political leader of the bloc and has refrained from pushing for quick new sanctions against the Russian energy sector.
Clear spring weather in Europe for now could soften the immediate blow from a gas shutdown, but the need to replace Gazprom’s supplies with alternative sources will be urgent. There is no doubt that already high gas prices will continue to rise, eventually pushing up already high inflation rates and hurting consumers across the European Union.
In response to the news, Ursula von der Leyen, President of the European Commission, said in a statement on Wednesday morning that the bloc was preparing to cut off gas supplies to Russia.
“Gazprom’s announcement that it is unilaterally cutting off gas supplies to consumers in Europe is yet another attempt by Russia to use gas as a blackmail tool,” she said, adding that she was working with allies to secure gas supplies for the affected member . states, and that the agency’s gas coordination group met on Wednesday morning to prepare a response.
So far, the European Union has imposed sanctions on Russian coal, which is actively used by both Poland and Germany, and is preparing the details of an oil embargo. But the embargo on Russian gas has long been seen as a Rubicon that the European Union should not cross because of how heavily Germany and other countries depend on it for heat and power.
Now it appears that Russia has decided to act first and block gas exports itself after EU countries refused to pay for gas imports in rubles, as demanded by President Vladimir Putin.
Mr. Putin is desperate to get paid in Russian currency because his ability to convert dollars and euros into rubles, which he can then use for his military operations in Ukraine, has been limited by measures that ban financial institutions in Europe and the United States. from interacting with the Russian central bank.
Bulgaria’s energy minister Alexander Nikolov said on Wednesday morning that his country has enough gas reserves for one month and is looking for alternatives.
“Bulgaria will not enter into negotiations under pressure and with a bowed head. Bulgaria is not inferior and is not sold for any money to any trading counterparty,” Mr. Nikolov said. “Obviously, natural gas is being used as a political and economic weapon,” he added.
Polish officials were equally confident on Tuesday evening. Poland’s Climate Minister Anna Moskva downplayed Russia’s decision, saying at a press conference in Warsaw that “we are ready to cut off completely” from Russian gas.