Europe floats €275/MWh gas price cap, G7 Russian oil price cap seen close
Quantum Commodity Intelligence - The European Commission has proposed a cap of €275/MWh ($283) on gas prices in a bid to shield consumers from market volatility in the wake of Russia's invasion of Ukraine.
The proposal will see the EU's executive attempt to limit the impact of high prices on the de facto European natural gas benchmark on the wider European economy.
The cap will kick in from January if the TTF price exceeds €275/MWh for more than two weeks and if the TTF price is €58 higher than LNG prices for 10 days in a row.
"This is not a regulatory intervention to set the price at the market at an artificially low level… It is a mechanism of last resort to prevent, and if necessary, address episodes of excessive high prices which are not in line with global price trends," said the European commissioner for energy Kadri Simson said Tuesday.
The Commission has been working on proposals to place a price cap on prices after TTF surged to record highs of €350/MWh at the end of August, an oil equivalent of more than $500/b.
The move to limit gas payments to Russia is part of a wider attempt to punish Moscow for its invasion of Ukraine, with successive rounds of sanctions hoping to squeeze Russian revenues to alter its behaviour.
A separate G7-led plan to cap oil prices and prevent financial, insurance, and logistical service providers from handling Russian oil priced above a certain threshold is being worked out although details of the cut-off level are yet to be announced.
On Tuesday, the Wall Street Journal reported the G7 hoped to agree on a price this week, with the paper saying a price of $60/b could be in place from 5 December.
