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Panic strikes EU after Putin makes declaration – ‘hostile’ countries to pay for gas in rubles

Russia’s president Vladimir Putin demanded ‘hostile’ countries pay for gas in rubles.

The declaration has caused a sharp increase in gas prices in Europe and concerns that such a move will deepen the energy crisis in the region, reports Reuters.

Putin makes declaration on new form of payment, rubles, for gas supplies from Russia.

Reuters reported that Putin announced on Wednesday during a meeting with ministers broadcast by Russian TV that he would demand payment of gas in Russian currency from ‘hostile’ countries. This declaration resulted in an immediate increase in prices by 30%.

“Receiving euros and dollars no longer makes sense to us”

“It is clear that receiving more euros, dollars and other currencies in exchange for our goods does not make sense to us,” said Vladimir Putin.

Putin added that the decision to accept payment for gas only in the Russian currency is a direct reaction to the sanctions against Russia imposed because of the attack on Ukraine.

Putin made an appeal to the governments to issue appropriate instructions to Gazprom to review the existing contracts. At the same time, all foreign consumers must have time to carry out the necessary operations.

The list of ‘hostile’ countries for Russia currently includes; The United States, Great Britain and all member states of the European Union.

The Russian president reasoned that the decision to freeze Russia’s assets abroad – as in the case of the reserves of the Russian Central Bank – the west de facto declared that it would suspend payments to Moscow and put an end to trust in currencies such as the euro and the US dollar.

Ursula von der Leyen, president of the European Commission, announced a few days ago that the EU intended to stop using Russian gas by 2027 – this means gaining independence from Russian energy within the next five years.

Since the declaration by Putin to trade in rubles gas has risen in prices by 30%

The declaration is one that has left many in shock and the most drastic decision to increase gas prices by 30 per cent implemented.

According to  Bloomberg, European gas reference prices rose by 30% to EUR 132.74 per MWh, the highest level in two weeks.

Gas from Russia is responsible for at least 40% of the total consumption in Europe. This year, gas imports from Russia to the European Union ranged from EUR 200 million to EUR 800 million per day.

Germany is already feeling the effects of high gas prices with fuel theft cases increasing in the country. We wrote about it here: Germany records highest cases of fuel theft

Source: Reuters, Bloomberg