Russian gas flows through Ukraine are set to stop on Wednesday when a transit deal between the two countries expires in the wake of Moscow’s full-scale invasion.

The pipeline was one of the last two routes still carrying Russian gas to Europe nearly three years into the full-scale war. EU countries will lose about 5 per cent of gas imports in the middle of winter.

While traders had long expected flows to stop, the end of the pipeline route through Ukraine will affect Europe’s gas balance at a time when demand for heating is high. Slovakia is the country most affected.

“While one would assume that losing those volumes [is] priced in, a strong upward price response initially isn’t out of the question,” said Aldo Spanjer, senior commodities strategist at BNP Paribas.

The deal to allow Russian gas to pass through Ukraine was agreed at the end of 2019, signed a day before the previous 10-year contract between the national gas companies was set to expire. At the time, the European Commission strongly promoted the deal.

After Russia’s 2022 full-scale invasion of Ukraine, however, the commission encouraged member states to seek alternative supplies as the bloc moved to wean itself off Russian fossil fuel imports. The Moscow-friendly governments of Hungary and Slovakia have resisted that shift and have sought to extend the deal beyond January 1.

The Ukrainian government had telegraphed months in advance that it was unwilling to negotiate an extension to the deal, as it wanted to deprive the Kremlin of its income from gas exports. Ending the flows would result in a $6.5bn loss for Russia, unless it could redirect them, according to the Brussels-based think-tank, Bruegel.

But it would also be a financial blow to Ukraine, which earned about $1bn a year in gas transit fees, though only about a fifth of that was gross profits. Analysts have suggested that Ukraine’s vast gas pipeline infrastructure could face increasing Russian attack, if there was no Russian gas flowing through it.

Slovak Prime Minister Robert Fico visited Moscow on December 22 to discuss the gas transit contract. He blasted Ukraine’s intransigence on the deal, asking whether the country had “the right to damage the economic national interests of an [EU] member state”.

Fico said on Facebook shortly before the deal’s expiry that “other gas transit options than Russian gas were presented to Ukrainian partners, but these were also rejected by the Ukrainian president”. The Slovak prime minister has also threatened to cut off back-up electricity supplies from Slovakia to Ukraine as retaliation.

Hungary’s Prime Minister Viktor Orbán has likewise sought to find a workaround to allow Russian gas imports via Ukraine. His government has also turned to the last remaining pipeline shipping Russian gas via Turkey and to neighbouring Romania to complement supplies.

Austria, which still imported Russian gas throughout 2024, has shifted to alternative sources such as liquid natural gas imports. Its energy company OMV in mid-December terminated its long-term contract with Russia’s Gazprom because of a legal dispute.

The cut-off of gas will also have a significant impact on neighbouring Moldova, which in mid-December introduced a state of emergency in the energy sector because of the uncertainty around Russian gas transit.

The halt to Russian gas flows through Ukraine is likely to increase European demand for pricier LNG, for which Asia is also competing.

EU officials have been adamant that the bloc can live without Russian pipeline supplies, even if it means accepting more expensive shipped gas from elsewhere.

The European Commission said on Tuesday it did not expect disruption. “European gas infrastructure is flexible enough to provide gas of non-Russian origin to central and eastern Europe via alternative routes,” it said. “It has been reinforced with significant new LNG import capacities since 2022.”

The Turkey pipeline still transporting Russian gas to Europe contributes about 5 per cent of the EU’s imports. The US recently imposed sanctions on Gazprombank, the main conduit for Russian energy payments.

But to mitigate the impact of sanctions, Russian President Vladimir Putin in early December dropped a requirement for foreign buyers of Russian gas to pay through the bank. Countries such as Turkey and Hungary also said they have received US exemptions from sanctions.

“The sanctions had previously added an extra layer of uncertainty over the fate of Europe’s remaining Russian gas supply as we enter the new year, helping to keep gas prices volatile,” said Natasha Fielding, head of European gas pricing at Argus Media, a pricing agency. The US waiver meant that “buyers of Russian gas delivered through the Turkish Stream pipeline could breathe a sigh of relief”, she said.

Traders are not ruling out an increase in Russian gas flows into Europe in the future. European companies that are reeling from high gas and energy prices, forcing them to cut back production, would return to buying Russian gas, which was inherently cheaper than LNG, one senior trader said.

“At some stage there will be a peace agreement . . . People will want to end the war, therefore they have to sign a peace agreement. One of the things Russia will get is its ability to resupply” Europe with gas, the trader said.

While European governments may impose restrictions to prevent the continent from once again becoming over-reliant on Russian gas, the trader said, “you would expect to see some Russian gas back in Europe, because fundamentally, geography has not changed”.

Additional reporting by Andrew Bounds

GOP Rep. Tim Burchett lauded House Speaker Mike Johnson on Monday for not cheating on his wife — while in the same breath apparently throwing shade at the speaker’s predecessor.

Burchett (R-Tenn.), 60, has not yet revealed whom he will support to lead House Republicans in the next Congress, but predicted that Johnson (R-La.), 52, would likely prevail in an upcoming speakership battle due to his honesty and integrity.

“I think he ultimately will. I think that the die has been cast pretty much. But as I stated, I will make up my mind on Friday,” he told Fox News’ “Your World” on Monday.

“Mike’s been a good friend to me and there is nobody more honest that I have dealt with in Washington,” Burchett went on. “He is a Christian man. He doesn’t cheat on his wife and I find that very appealing in Washington, DC.”

That bit about infidelity appears to be a nod to former House Speaker Kevin McCarthy (R-Calif.), who has long faced speculation and rumors about being unfaithful to his wife.

Back in 2015, during the aftermath of the resignation of House Speaker John Boehner (R-Ohio), for example, McCarthy was accused of having an affair with a sitting member of the House — former Rep. Renee Ellmers (R-NC) — in an anonymous Wikipedia posting.

That post was later removed but loomed large when McCarthy abruptly withdrew from consideration for the speakership at the time. McCarthy and the other rep denied the accusations.

Burchett had been one of eight Republicans who banded together with a solid bloc of Democrats to oust McCarthy in the fall last year.

He later voted against a May effort by Rep. Marjorie Taylor Greene (R-Ga.) to topple Johnson after he brought up a vote on legislation to re-up aid to war-torn Ukraine.

The architect of the mutiny against McCarthy, former Rep. Matt Gaetz (R-Fla.) — who has openly fessed up to being a womanizer prior to his marriage — chimed in and echoed Burchett.

“We all know who Burchett is talking about… Total f–king savage,” Gaetz wrote on X.

Just last week, the House Ethics Committee voted to release a damning ethics report accusing Gaetz of using illicit drugs and shelling out over $90,000 to 12 different women between 2017 and 2020 in exchange for sex.

Most alarmingly, the panel accused him of having sex with a minor — something Gaetz has denied.

The Sunshine State Republican also accused the committee of smearing him and cast aspersions on the claims of him paying for sex.

McCarthy has claimed Gaetz ousted him for his refusal to quash the ethics probe — something the soon-to-be One America News Network TV anchor has denied.

Earlier this year, the former speaker further speculated that Gaetz might be cheating on his wife — but did not provide evidence.

Johnson will fight to keep the speaker’s gavel during a speakership vote on Friday.

Already, Rep. Thomas Massie (R-Ky.) has indicated he will vote against Johnson, and others such as Reps. Andy Biggs (R-Ariz.) and Victoria Spartz (R-Ind.) have said they are on the fence.

President-elect Donald Trump formally endorsed Johnson on Monday, giving him a potential boost despite his stamp of approval failing to nudge Massie, Biggs or Spartz.

Gaetz has also urged Republicans not to oppose Johnson.

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Hungary is set to permanently lose access to just over €1bn in EU funds on January 1, as disputes between Budapest and Brussels hamper the country’s capacity to drag itself out of recession — and undermine Prime Minister Viktor Orbán’s bid for re-election in 2026.

The freeze on EU funds has hit Hungary at a time when its government has little room for manoeuvre. Its budget deficit this year stands at more than 4.5 per cent of GDP, increasing political tensions.

Hungary’s economy shrank by 0.7 per cent in the third quarter — the second contraction in a row — plunging the economy into a technical recession amid weak demand in the automotive, electronics and pharmaceutical sectors that dominate its manufacturing base.

Of the €6.3bn in funds frozen by Brussels over concerns about the rule of law, Budapest will permanently lose €1.04bn because this amount must be allocated by the end of 2024 or it expires. Hungary is also missing out on €1mn per day in funding from the EU over its illegal treatment of asylum seekers; its total losses over the treatment of asylum seekers will amount to €200mn by the year’s end.

Both come on top of a one-off €200mn fine imposed by the European Court of Justice in June over breaching asylum rules and ignoring an earlier judgment.

In total, €19bn in post-pandemic recovery funds and other EU resources remain blocked.

János Bóka, EU affairs minister for Hungary, said in mid-December that it was “very difficult” not to interpret the withdrawal of funds as “political pressuring”, adding that Budapest would take action to “remedy this discriminatory situation”.

The government is also seeking compensation for the ECJ’s June ruling that led to the multimillion-euro fines, in another sign that relations between Brussels and Budapest have reached a new low.

The Hungarian opposition has seized the opportunity to blame Orbán’s government for the economic malaise.

Péter Magyar, an Orbán ally turned foe whose party caught up with Orbán’s Fidesz in EU elections in June and has since come to lead opinion polls, said: “You have had 14 years with unlimited power and billions in EU funds . . . This ship has sailed. Hungarians won’t wait. Enough is enough!”

EU money is likely to remain blocked all the way until the elections, with neither side willing to let up on what each considers to be fundamental issues, including anti-corruption measures, judicial independence, and Hungary’s treatment of minorities and asylum seekers.

Brussels has also questioned Budapest’s belief that it can raise spending over the course of the next four years, based on Hungary’s expectations of stellar growth.

The two sides have until mid-January to agree on a compromise fiscal plan between 2025 and 2028, with the EU set to give the country bad marks unless the government lowers spending.

“There will be a lot of tug of war,” said Péter Virovácz, ING’s senior economist for Hungary.

For the 2025 budget, billions of euros worth of mostly EU-funded investments and social spending have been cancelled, prompting Magyar to tour the country, calling attention to crumbling hospitals, inadequate childcare facilities and railway stations that have been left to the elements for decades.

Economy minister Márton Nagy has acknowledged that the government cannot entirely plug the gap left by EU funding.

“You can’t just say you want a shiny new hospital, you need money. For that you need growth,” Nagy told the Financial Times. “The economy needs to be fixed first . . . for years we have stumbled from crisis to crisis, Covid, energy crisis, war, now the weakness of the German economy . . . We all know tax revenues are missing so we need to recreate those.”

Nagy has insisted the government will not overspend, saying he will limit the use of funds to boost growth to 0.5 per cent of GDP.

Instead of using government funds for stimulus, the economy minister has proposed enabling people to use about €5bn worth of private pension fund savings for real estate purchases or renovations tax-free, in a move aimed at boosting weak demand.

Orbán, meanwhile, is betting that investors from Asia might fill the gap — a policy that he dubbed “economic neutrality”.

Chinese investment in Hungary has surged in recent years, but few think it can entirely compensate for a lack of funds from Brussels.

Before the spats between Brussels and Budapest intensified in 2022, the EU was ready to fund several big infrastructure projects in Hungary.

Those included a railway link from the centre of Budapest to the capital’s airport.

“We could have had a golden age, with more than €10bn spent on the sector in this decade alone,” said Dávid Vitézy, who led the Budapest transport authority at that time, and later briefly served as Orbán’s state secretary for transport. “We have lost nearly all of that.” 

“EU funding is an important part of a public investment in Hungary,” EU economy commissioner Valdis Dombrovskis told the FT in an interview in December, adding that “it’s important that obviously Hungary does what is necessary to ensure the availability of the funding”.