Putin’s energy gamble may prove a double-edged sword for Russia

Putin’s energy gamble may prove a double-edged sword for Russia

President Vladimir Putin's threat to completely cut off energy supplies to the West in a deepening confrontation over Ukraine could prove to be a double-edged sword for Russia.

Just before the European Union announced a price cap on Russian gas on Wednesday, Putin threatened to sever supplies if such limits were imposed, warning the West it would freeze like the wolf's tail in a famous Russian fairy tale.

Halting flows to Europe from Russia, the world's second largest oil exporter after Saudi Arabia and the top natural gas exporter, would likely further roil global energy markets and leave the world economy facing even higher prices.

Alexei Miller, chief executive of Russian state-controlled gas giant Gazprom, said in August that European gas prices could surge to $4,000 per thousand cubic metres, from around $2,200 seen on Wednesday.

If the EU pursues its plan to wean itself off Russian energy it would hurt Russia too.

A Russian strategy document, seen by Reuters and discussed by the government, outlines the "limitations and risks" to the energy sector of the conflict, including the effective subsidising of domestic energy by international customers.

"A reduction in supplies to foreign consumers will lead to an imbalance in the system, when low prices on