The Council of the European Union has agreed on a €180/MWh gas price cap intended to contain gas price fluctuations and ease the current energy crisis in Europe. The EU energy ministers agreed to trigger the cap if the month-ahead price on the Dutch Title Transfer Facility (TTF, the main European benchmark for gas prices), exceeds €180/MWh for three days, and if the month-ahead TTF price is €35 higher than the reference price for LNG on global markets for the same three days. The cap can be triggered starting from 15 February 2023.
A suspension mechanism was also put into place to ensure that the EU remains attractive to gas suppliers. The market correction mechanism can notably be suspended if gas demand increases by 15% in a month or 10% in two months, if LNG imports decrease significantly, or if traded volumes on the TTF drops significantly compared to the same period of the previous year.
Earlier in December 2022, the EU, alongside the G7 countries and Australia, already agreed to implement a US$60/barrel (€56.5/barrel) price cap on maritime Russian crude oil exports. This oil price cap will be followed by a similar measure, this time affecting Russian petroleum products exports, which is expected to be implemented on 5 February 2023.
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