Tension as Putin says unfriendly countries dependent on Russian gas will pay in rubles

Russia will seek payment in rubles for natural gas sold to “unfriendly” countries, President Vladimir Putin said on Wednesday.

That decision has ignited European gas prices amidst fears of worsening energy crises in European countries that have ramped up sanctions against aggressive Russia, Putin, and his cronies over the Ukraine war.

Europe depends heavily on Russian gas for heating and power generation, and the European Union is split on whether to sanction Russia’s energy sector.

Putin’s message was clear: If you want our gas, buy our currency. It remained unclear whether Russia has the power to unilaterally change existing contracts agreed upon in euros.

The ruble briefly leapt after the shock announcement to a three-week high past 95 against the dollar. It pared gains but stayed well below 100, closing at 97.7 against the dollar, down more than 22% since February 24.

Some European wholesale gas prices were up to 30% higher on Wednesday. British and Dutch wholesale gas prices jumped.

Russian gas accounts for some 40% of Europe’s total consumption. EU gas imports from Russia this year have fluctuated between €200 million to €800 million ($880 million) a day.