(Bloomberg) -- The US and its allies have discussed trying to cap the price on Russian oil as a way to curb the Kremlin’s revenue, as German Chancellor Olaf Scholz accused Vladimir Putin of using energy as a political weapon. 

The risk of potential disruption from Russia prompted a continued rally in European natural gas, which was headed for the longest stretch of daily gains in more than nine months. Germany, Europe’s largest economy, braced as the Nord Stream 1 pipeline -- the main conduit to the continent -- is set to close next week for annual maintenance, with speculation emerging that it won’t return to full service.  

Elsewhere, foreign ministers from the Group of 20 nations began arriving for a two-day meeting in Bali where Russia’s war is expected to dominate discussions. The top Ukrainian diplomat earlier cast doubt on a near-term breakthrough in talks to unblock grain exports from the war-ravaged nation’s Black Sea ports, as fears of a global hunger crisis intensify.

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Key Developments

  • Ukraine War Short-Circuits Europe’s Clean Energy Aspirations
  • US, Allies Discuss Capping Russian Oil Price at $40-$60 a Barrel
  • Scholz Accuses Putin of Using Natural Gas Deliveries As Weapon
  • Russia’s War-Weary Tech Talent Floods Into Neighboring Georgia
  • Russia Dodges Worst Recession Fears as Oil Eases Sanctions Pain
  • Blinken Plans ‘Candid Exchange’ With China’s Wang on Ukraine War

On the Ground

Russia twice attacked the Odesa region with missiles overnight, destroying two agricultural hangars and hitting Snake Island, a strategic outpost off the Black Sea coast, local authorities said on Telegram. In the east, Russian troops attempted to conduct assaults in Slovyansk in the Donetsk region, and to establish full control over Luhansk, Ukraine’s General Staff said in its morning update. The Institute for the Study of War said there were no claimed or assessed Russian territorial gains in Ukraine on Wednesday for the first time in 133 days of war.

(All times CET)

European Gas Extends Rally as Supply Crunch Haunts Market (8:55 a.m.) 

Natural gas in Europe headed for the longest stretch of daily gains in more than nine months as persistent fears of deeper supply cuts by Moscow spread through the market.

Benchmark futures, which have doubled their value over the past month, rose as much as 4.7% for a seventh day of increases. The crisis has also sent power prices to record highs as Russia’s tightening hold on energy supplies brings the risk that Europe may struggle to keep the heat and lights on this winter. 

Ukraine War Short-Circuits Europe’s Clean Energy Plan (6:12 a.m.)

Putin’s invasion of Ukraine has forced several countries to backpedal on the European Union’s “Fit for 55” plan for decarbonization, to compensate for cuts in Russian fuel supplies. European countries have burned more coal, planned new liquefied natural gas terminals, and extended the region’s network of gas pipelines since February.  

The climate plan announced last July by the European Commission proposed tightening its existing cap-and-trade system for carbon emission permits, ramping up renewable power, and phasing out cars with internal combustion engines to slash emissions by 55% by 2030 from 1990 levels. The war in Ukraine has highlighted the degree to which those ambitions relied on gas piped from Russia.

Scholz Accuses Putin of Using Gas Deliveries as Weapon (8:30 p.m.)

The remarks from the German chancellor come as his country faces the prospects of further cuts in gas flows, with the Nord Stream pipeline, the main gas conduit to Europe, set to close for maintenance next week. Concerns are mounting that the pipeline won’t return to full service after the work.

“Germany has relied for too long and too one-sidedly on energy deliveries from Russia,” Scholz said at an event of the BEE renewable energy business association in Berlin. “Today we have to admit: Russia uses energy as a weapon. No one actually believes that Russia is reducing its gas supplies for technical reasons alone,” Scholz added.

Read more: Scholz Accuses Putin of Using Natural Gas Deliveries As Weapon

US and Allies Discuss Capping Russian Oil Prices at $40-$60 (5:40 p.m.)

The US and its partners have been exploring ways to limit Russian oil revenues while minimizing the impact on their own economies. The range spans from what is believed to be Russia’s marginal cost of production and the price of its oil before the Feb. 24 invasion. 

A more specific threshold would depend on market conditions when a cap is agreed and those could change significantly. The aim is to cut Moscow’s revenue for its war in Ukraine but the risk is that poorly executed measures would lead to a spike in oil prices.

Read more: US, Allies Discuss Capping Russian Oil Price at $40-$60 a Barrel

Estonia Ratifies Swedish, Finnish NATO Membership (4:04 p.m.)

The Estonian parliament ratified Finland and Sweden’s accession protocols for joining NATO. The protocols must be vetted by each of the alliance’s 30 countries for the two Nordic countries to become members.

Kremlin Pushes New Wave of Repression at Home as War Drags On (2:50 p.m.)

Russian authorities are pushing through a raft of new repressive measures against domestic opponents, expanding crackdowns on critics as the Kremlin’s war in Ukraine is in its fifth month.

Legislators have approved new proposals to dramatically broaden treason statutes, as well as restrictions on “foreign agents,” a legal category that’s been used widely against critics and independent journalists. Another new draft law would restrict the publication of any information deemed to be of use by “unfriendly countries” in targeting sanctions. The moves all have strong Kremlin support.

Already-restrictive rules on public protests are being further tightened as thousands of Russians have been detained for speaking out against the war. Prosecutions under wartime censorship laws have mounted and even loyalists have found themselves targeted. 

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