The wholesale gas prices in Europe jumped 20-30% on Wednesday, especially in countries like the United Kingdom and the Netherlands, after Russian President Vladimir Putin ordered unfriendly to pay for gas in rubles.
It was part of his retaliation measures for the sanctions put on Russia by the Western unfriendly countries, including the EU, the US, the UK, Ukraine, Japan, Canada, Switzerland, Norway, Singapore, and South Korea.
According to Putin, it makes made no sense to give goods and not receive payment in rubles from countries that have made illegitimate decisions on the so-called freezing of the Russian assets.
He stressed that the changes will only affect the currency of payment, pointing out that Russia will continue to supply natural gas in accordance with volumes and prices fixed in previously concluded contracts.
Up until now, nearly all Russian gas purchase contracts into Europe were denominated in euros or dollars with Gazprom’s sales of natural gas to Europe and other countries primarily settling in euros, at around 58%, since January.
The price for day-ahead delivery in the UK jumped by 11.8% to close at 246.00 pence p/therm, while the winter 2022 price increased by 11% to 264.01 p/therm.
The front-month contract in the Dutch gas market went up 14.1% to close at 113.00 euros per megawatt-hour (MWh) while the Q2 price increased by 15.3% to 113.00 euros/MWh.
Although it is still 22% below its value before the war in Ukraine, the ruble also went up to 97.7 against the dollar.
Russia provides over 40% of the natural gas needs of Europe, but the European Union has recently proposed legislation on minimum gas storage levels.
The US, however, already announced it would be halting Russian oil imports.
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