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EUROPEAN gas prices soared today after Russian President Vladimir Putin announced that he would only accept payments in roubles from what he described as “unfriendly” countries.
Wholesale gas prices shot up by 30 per cent following Wednesday’s announcement amid severe shortages and rising energy prices in Europe.
Mr Putin said that he was clear that if countries wished to buy gas from Russia then those that are deemed hostile would also need to buy its currency.
It presents a major challenge to Europe, with Russian gas accounting for some 40 per cent of supplies at a cost of around €200 million to €800m (£167.7m to £666.9m) a day.
A number of European countries and the US have imposed sanctions on Russia following its invasion of Ukraine on February 24.
But the European Union remains split on the issue of sanctioning its energy sector due to its reliance on Russian gas.
German Economic Minister Robert Habeck called Mr Putin’s demand a breach of contract.
Polish government sources echoed Mr Habeck, saying it would not be renewing its deal with Russian state energy company Gazprom when it expires next year.
Mr Putin said that the Russian government and central bank had one week to come up with a solution on transferring operations into the Russian currency.
Gazprom would be ordered to make the corresponding changes to contracts, he explained.
The European Commission, the unelected body that dictates EU policy, has already declared that it will cut the economic bloc’s dependency on Russian gas by two-thirds this year.
The executive elite insists that it will end reliance on Moscow altogether by 2030, an ambitious and possibly unrealistic aim.
The move is another blow to the dollar economy as the global currency and with it US control of financial markets .
Last week Saudi Arabia caused alarm in Washington after it announced that it would be switching away from the dollar to trade instead in the yuan when it comes to Chinese oil sales.
Riyadh made the announcement amid anger over a perceived lack of US support for its seven-year war on Yemen and failure to offer assurances over security commitments.
Saudi Arabia has traded exclusively in dollars since a deal struck with the Nixon administration in 1974.
Some 80 per cent of the world’s total oil sales are made in the US currency.
