Putin warns Russia will cut all energy supplies over price cap threat

The Kremlin will stop supplying oil and gas if global price caps on Russian energy are introduced, Vladimir Putin has warned.

The EU is currently exploring whether to impose caps in a bid to limit Russian funds during the Ukraine war and drive down the soaring cost of gas for people across the bloc.

However, Germany has already indicated that it is “sceptical” about the idea.

Over in Russia, Mr Putin described Europe’s proposal as “stupid”, saying it would lead Russia to renounce its supply contracts.

“We will not supply anything at all if it contradicts our interests,” Mr Putin said in a speech at an economic forum in the eastern city of Vladivostok.

“We will not supply gas, oil, coal, heating oil – we will not supply anything,” he added. “We would only have one thing left to do: as in the famous Russian fairy tale, we would sentence the wolf’s tail to be frozen.”

The Russian president rejected accusations that Moscow was using gas as a weapon. The 69-year-old continues to claim Russia only shut the Nord Stream 1 pipeline to Europe last week because vital maintenance work was needed.

The long-time leader also struck a defiant tone by insisting Russia had not lost anything from the Ukraine war and by saying the world’s future lies with the Asia-Pacific.

“Irreversible and even tectonic changes have taken place throughout international relations,” he said. “The role of dynamic, promising countries and regions of the world, primarily the Asia-Pacific region, has significantly increased.”

Mr Putin also used his speech to dismiss the effectiveness of the West’s sanctions, saying it is “impossible” to isolate Russia, as Moscow can simply turn to new opportunities in the Middle East and Iran.

Casting the US and its allies as aggressors, he said: “I am speaking of the West’s sanctions fever, with its brazen, aggressive attempt to impose models of behaviour on other countries, to deprive them of their sovereignty and subordinate them to their will.”

Although western sanctions have had some effect on the Russian economy, new research shows that enormous energy sales continue to prop up the Kremlin’s finances.

The Centre for Research on Energy and Clean Air said earlier this week that Russia had earned £141bn from oil, gas and coal since the start of the war on 24 February.

The Finnish think tank estimated that Moscow has spent £86bn on its invasion, significantly less than it has accrued in energy purchases.

The research came as Russian economy minister Maxim Reshetnikov suggested his country’s GDP would not drop this year by as much as previously forecast.

The Kremlin believes Russian GDP will contract by 2.9 per cent in 2022, lower than the 4.2 per cent decline it predicted in August.

However, Mr Putin admitted in his speech on Wednesday that Western sanctions had caused some difficulties in industries and regions.

Analysts have noted that Russia’s decision to buy weapons and military hardware from countries like Iran and North Korea shows desperation.

The Biden administration announced earlier this week that Moscow was in the process of buying thousands of rockets from Pyongyang, with commentators saying it is a sign that Russia is struggling with military supplies.

“The Kremlin should be alarmed that it has to buy anything at all from North Korea,” said Mason Clark, the Russia team lead at the Institute for the Study of War.