Putin 'continues to use energy as a weapon' says Von der Leyen
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France’s economic and finance minister has warned that Russian President Vladimir Putin will most likely cut off gas supplies to Europe as a response to the sanctions imposed by the EU. The French minister warned that this move could spark chaos across the continent, as countries have reportedly begun making planned lists of companies which will get priority access to energy supplies in the event of a severe shortage.
These companies are ones that are regarded as vital to their supply chains, as the EU begins a form of state economy planning that has not been seen on the continent for decades.
Fears of a complete cut-off have intensified after Putin threatened to trigger a “catastrophic” energy crisis if Western powers continue to press sanctions on Moscow.
In a speech on Friday, he admitted that while the sanctions imposed by the West have hurt Russia’s economy, he pointed out that the record inflation and cost of living crisis “reveals, once again, that sanctions on Russia end up causing much more harm to those countries that impose them.
“The further use of sanctions could lead to even more severe consequences, even, without exaggeration, catastrophic consequences on the global energy market.”
This comment suggests that if G7 leaders go ahead with their plan to impose a price cap on Russian oil imports, Putin may retaliate by turning off the taps to Europe.
Analysts at JPMorgan have warned that such an event would push oil prices towards $380 (£317.32) a barrel if Moscow slashed energy supplies as “a way to inflict pain on the West”.
Speaking at the Rencontres Economiques conference in Aix-en Provence, France’s economic and finance minister, Bruno Le Maire said: “Let’s prepare for a total cut-off of Russian gas. Today that is the most likely option.
“You also have to prepare load-shedding plans, we are doing it.
“It means looking in a very specific way at each company, each employment area.
“Which are the companies that should reduce their energy consumption, and which are the ones that cannot.”
Fortunately, the UK is not heavily reliant on Russian oil and gas from Russia, receiving most of its gas supply for Norway, which suggests that Britain could escape the nightmare scenario currently prepared for by the EU.
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However, given that both the UK and Norway are in a single energy market with the rest of the world, Russia cutting off the gas would push wholesale gas prices up higher.
Eventually, these wholesale gas prices are pushed onto customers, as UK household energy bills are set to reach an eye-watering £3,000 by October this year.
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