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The EU leaders have called Russia’s decision to cut gas supplies “blackmail” and have warned European countries not to accept Russian terms

cut gas supplies

The EU leaders have called Russia’s decision to cut gas supplies “blackmail” and have warned European countries not to accept Russian terms.

Oil and gas prices’ uptrend direction continues as the consequences of the military operation in Ukraine and the sanctions against Russia are implemented. The U.S sanctions have had an impact on the Russian rubble, dragging it to an all-time low.

Russia responded to the threat by activating the energy weapon that indicates all non-friendly countries must pay for gas transactions in rubles. The EU warns countries that paying with the Russian ruble instead of the U.S dollar is a direct action against the sanction. And therefore, they will be accused of helping a hostile country.

As of today, Russia has weaponized its energy weapons and directed them to its hostile countries, which has led to a 20% increase in gas prices in Europe. Fortunately, the percentage decreased afterward to 5%. Today, Russia has decided to cut gas exports to Poland and Bulgaria, which was described as a major political exclamation. Crude oil rose by 1.13% this morning to $101.2 per barrel, while gold declined to $1888 per ounce. Russia’s recent actions have caused gas prices to skyrocket.

The EU leaders said that this is a clear act of blackmail and it’s not acceptable by any means. They added that it’s not acceptable to pay in the ruble either.

The euro fell to a five-year low against the US dollar, while the dollar maintained its steady rise and market value.

China, on the other hand, was one of the first countries to support Russia’s new rules, declaring that China would make truncations with Russia based on the peer Yuan/Ruble.

Despite the fears of today’s decisions, the S&P rose by 22 basis points, the Nasdaq jumped by 23 basis points, and the Dow Jones index added 163 basis points. The Dow Jones industrial companies performed well these past two weeks, cutting their losses from March disappointment by more than half.

Treasury yields in the United States are still at their highest level since 2019, raising concerns about the effects of the next Federal Reserve meeting interest hike.

The data indicate that Russia represents a third of gas supplies for European countries. Putin knows that well. That’s why the probability of the success of energy weapons is high. Four European countries accept paying gas in rubles, and based on the current hot market, the number will likely increase.

A summary of what is going on now in Europe: Russia shows no signs of retreating or hesitation about cutting off gas to countries that won’t accept its terms. So, there will be more cutoffs in the future, which means that European countries must find another gas supplier or accept the current terms.

On the other hand, a gas tension between Algeria and Spain on the risen, after Spain accepted reverse the Algerian gas exports to Morocco and other counties. Based on the contact between both countries, this is not acceptable.

The energy weapon and gas prices that could soar in the next weeks or days, will affect the U.S energy and fuel prices as well. Therefore, more inflation pressure will occur, therefore a more aggressive interest hike.

Written by Editor

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