Russia has scrapped plans to reopen a major pipeline that sends natural gas to Europe.
The decision by Gazprom, a state-controlled firm, will make it more difficult for Europe to secure fuel ahead of the winter.
Gazprom said the Nord Stream 1 pipeline would remain closed because of a leak in the main gas turbine, although Siemens Energy – which usually services the turbines – said such a leak should not prevent operation.
Both Europe and the US National Security Council have accused Russia of using gas as a “weapon against consumers”.
But earlier, European Council President Charles Michel vowed: “Use of gas as a weapon will not change the resolve of the EU.”
Wholesale gas prices have climbed 400% since August last year – bringing misery to households and businesses in Europe, where dependence on Russian energy has historically been high.
Also on Friday, G7 finance ministers agreed to impose a price cap on Russian oil exports to make it harder for Vladimir Putin to fund his invasion of Ukraine.
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Despite selling less oil since the war began, Russia made £600m more from oil sales in June than it did in the previous month because of rocketing prices pushed up by the war.
British Chancellor Nadhim Zahawi said the price cap would also bring global price stability that would “protect our citizens from oil price shocks next year”.
He added: “It will mean that Putin can’t profiteer from excessively high oil prices and of course, protect all of us from oil price shocks next year and beyond.”
Ukrainian President Volodymyr Zelenskyy, who has consistently called for tougher sanctions on Russia, said the move “will not only limit the flow of petrodollars and gas euros to Moscow, but also, importantly, restore justice for all Europeans, whom Russia is trying to blackmail with artificially inflated prices on the energy market”.
But former Russian president Dmitry Medvedev wrote on Telegram that Moscow would retaliate by turning off supplies to Europe completely, saying: “There will simply be no Russian gas in Europe.”
Germany, one of the most reliant on Russian energy, has been preparing for a cut to gas supplies and its network regulator has warned citizens and industry to cut consumption.