The European Union has proposed a price cap on Russian gas just as Russia’s President Vladimir Putin warned that such a move would cause Moscow to cut off all energy supplies, Aljazeera reported.

Europe is in the middle of an escalating standoff with Russia that could drive up already-soaring European gas prices further in advance of the cold months ahead. Brussels accuses Moscow of weaponising energy supplies in retaliation for Western sanctions imposed on Moscow over its invasion of Ukraine. Russia continues to insist that the sanctions are causing the supply problems, which it puts down to pipeline faults.

On Friday, Russia’s Gazprom fully suspended gas supplies through the Nord Stream 1 pipeline to Germany after it said it found an engine oil leak during maintenance work.

Rising tensions

Putin has warned that contracts could be discarded in the event of price caps.

“We will not supply anything at all if it contradicts our interests,” Putin said on Wednesday at an economic forum in Vladivostok. “We will not supply gas, oil, coal, heating oil – we will not supply anything,” Putin stated. Europe usually imports about 40 percent of its gas and 30 percent of its oil from Russia. Despite the warnings, the EU is planning to press ahead with a price cap on Russian gas and also a ceiling on the price paid for electricity from generators that do not run on gas, according to Aljazeera. “We will propose a price cap on Russian gas … We must cut Russia’s revenues which Putin uses to finance this atrocious war in Ukraine,” European Commission President Ursula von der Leyen told reporters.