Natural gas prices in Europe skyrocketed on Wednesday after Poland and Bulgaria were hit by a supply freeze from Russia in response to the countries' refusal to pay for deliveries in rubles.
May futures on the Netherlands-based TTF trading hub climbed to $1,374 per 1,000 cubic meters on Wednesday morning, or nearly $125 per megawatt-hour in household terms, according to data from London’s ICE exchange.
Russian state energy giant and major gas exporter Gazprom said earlier on Wednesday it had completely halted gas flows to Bulgaria and Poland after the two countries failed to pay for April supplies in the Russian currency. According to Gazprom, the suspension will remain in force until payment is received in rubles.
Russia demanded in March that its natural gas exports to “unfriendly” countries be paid for in rubles, as Western sanctions over the conflict in Ukraine severely restricted Moscow’s ability to conduct transactions in dollars and euros. Most EU countries refused to accept the terms, leading to concerns that Russian supplies would be halted from April 20, when contract payments were due. Among EU member states, so far only Austria and Hungary have agreed to pay for Russian gas in rubles, with Germany indicating it could be a possibility.
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