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Natural gas pipeline.

REUTERS/Dado Ruvic/

What We're Watching: Russia cuts off gas, EU cuts off Hungary, Erdogan wants to cut Saudi deal

Is Russia’s gas strategy backfiring?

European natural gas prices soared on Wednesday after Russia turned off the gas taps to Bulgaria and Poland. Both countries, which are members of the EU and NATO, had refused to meet Vladimir Putin's recent demand that any countries deemed "unfriendly" to Moscow must pay for Russian gas in rubles. So far, Hungary is the only EU member state willing to do that, but it accounts for just a tiny portion of overall Russian gas sales to Europe. The bigger problem is whether private companies will defy their governments by agreeing to pay in rubles — and at least four have reportedly agreed to do so. For now, larger European countries like Germany have promised they'll share their gas supplies with Bulgaria and Poland so long as the Russian pipes remain closed. If that solidarity holds, and if the EU continues with plans to dramatically reduce its reliance on Russian gas, Moscow's gas leverage over the Europeans might not be as strong as Putin thought. That said, he may be betting that European consumers — read: voters — won't be willing to put up with higher prices indefinitely, particularly once winter rolls around again. Natural gas stories tend to play out over long periods of time — this one will be no exception.

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Hungary's Prime Minister Viktor Orban

Beata Zawrzel via Reuters

Viktor Orban’s moment of truth

On Sunday, Hungary’s nearly eight million voters will elect 199 members of the country’s National Assembly, which is now dominated by the Fidesz Party and polarizing Prime Minister Viktor Orban.

Europeans will watch closely to see if the EU’s longest-serving head of government and no. 1 gadfly can win a fourth consecutive term. Vladimir Putin will watch to see if his most-trusted ally inside the EU can survive his toughest challenge to date.

Orban’s biggest worry is that six opposition parties, which agree on little beyond a common desire to push Orban out of power, have settled on a single candidate to replace him: Peter Marki-Zay, a 49-year-old mayor from a small city in the southeast.

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