EU alerts companies not to purchase Russian gas in rubles

European Commission President Ursula von der Leyen warned agencies now not to bend to Russia’s demands to pay for gas in rubles, as the continent scrambles to respond to Moscow’s circulate to start switching off resources.

Gazprom PJSC grew to become off the faucets to Poland and Bulgaria on Wednesday in a dramatic escalation of the standoff between Russia and Ukraine’s European allies. Moscow became making accurate on a chance to cut supplies if bills weren’t made in local currency, and interest now turns to how Germany and Italy — the most important European buyers of Russian fuel — will reply.

“Companies with such contracts should not accede to the Russian demands,” von der Leyen said. “This would be a breach of the sanctions so a high risk for the companies.”

EU solidarity can also now be examined: as payment cut-off dates start falling due inside the subsequent month, governments and organizations across Europe need to decide whether to meet the new regulations or face the possibility of gas rationing.

Benchmark prices surged on Wednesday extra than 20% but then eased as buyers reassessed the chances of a much broader cutoff.

Germany also reiterated that agencies ought to keep paying in euros, following EU hints, and Economy Minister Robert Habeck said the risk of flows being severed needed to be taken seriously.

“Russia is showing that it’s ready to get serious, that if one doesn’t comply with supply contracts or payments, they’re ready to put a stop to gas deliveries,” he said. “We have to take that seriously, and that also goes for other European countries. I take that seriously.”

When he first announced the demand, Putin stated moving to rubles could assist defend Russia’s large gasoline revenues from sanctions or seizure via the EU. The circulate additionally regarded geared toward making sure Gazprombank, one of few big country banks no longer hit with the severest sanctions, would stay largely untouched.

Putin has also time and again highlighted the monetary and political charges of better energy charges in Europe, suggesting the Kremlin may additionally agree that western governments won’t be capable of resisting the stress regionally of a cutoff so long as Moscow can.