EU energy ministers meeting in Luxembourg today are set to have a first discussion on the emergency actions in the gas market proposed by the Commission last week. After heads of government agreed to push ahead on measures to contain the energy crisis, member states now need to sort out the details of a regulation that would pave the way for tools including gas-price caps, volatility controls and joint purchases. But the bloc’s executive arm is advising members that any such price limit would need to avoid boosting demand or subsidizing electricity to foreign consumers and would have to include power-importing countries like the UK and Switzerland to be effective, we’ve been told. Officials go into the meeting with a boost from warm weather and ample stockpiles, which are easing fears of shortages this winter. Yesterday, benchmark gas prices fell to levels not seen since June, but consumers will still have to wait for relief.  - Max Ramsay and Ewa Krukowska

What's Happening

Sanctions Impact | EU sanctions aimed at Russia’s crude exports may be starting to have an effect, six weeks before they’re due to come into force. Seaborne crude shipments from Russia fell to a five-week low in the seven days to Oct. 21. This, combined with the smallest duty rate on overseas shipments since February 2021, cut the Kremlin’s weekly revenues from crude sales to the lowest since the invasion in February.

Ukraine Reconstruction | German Chancellor Olaf Scholz is convening a conference today with Ukrainian Prime Minister Denys Shmyhal and senior European figures as Kyiv’s allies work to create a more reliable funding path next year. Commission President Ursula von der Leyen is co-hosting the conference and Ukrainian President Volodymyr Zelenskiy will give a virtual keynote address. 

Funding Hungary | Budapest is in the “last phase” of talks with the EU to secure funds from the bloc’s Recovery and Resilience Facility, according to the country’s finance minister. Earlier this month, EU member states gave Hungary an extra two months to comply with demands to rein in corruption before deciding whether the bloc should withhold access to billions of euros in funding.

Subsidizing Gas | Germany is considering the introduction of subsidies on natural gas as soon as January as the country seeks to cushion costs for households and businesses amid the energy crunch. A government-appointed panel had recommended a start in March or April 2023, mainly because utilities will need some time to solve technical problems. 

Crisis Loans | The European Central Bank is searching for ways to stop lenders from profiting unduly as it raises interest rates to combat record inflation. The issue concerns about €2.1 trillion of ultra-cheap loans that were granted at the height of the pandemic to keep credit flowing and stave off deflation.

In Case You Missed It

Consumer Cutbacks | The severe “inflation fatigue” facing European consumers is forcing a range of “coping behaviors” not seen since the austere 1970s and 1980s, according to market research and data analytics firm IRI. Their report found nearly three-quarters of European consumers surveyed were cutting back spending on everyday items, including food. 

Controversial Remarks | Romania’s Defense Minister Vasile Dincu resigned after making public statements implying Ukraine may have to cede territory to Russia to end the war. The comments drew a rebuke from Romania’s president, who said only the government in Kyiv can decide with whom to negotiate. Dincu cited the “impossibility” of working with the head of state in a resignation letter. 

Climate Stance | EU countries have agreed on a negotiating stance before crunch climate talks in Egypt two weeks from now, opening the door for discussions on how to compensate developing countries for losses caused by extreme weather. The member states signaled support for an agenda item on the issue of loss and damage, according to conclusions agreed by environment ministers yesterday.

Greenwashing Crackdown | Asset managers have dramatically reduced the number of new ESG funds they’re rolling out, as a tougher regulatory environment makes it harder to make claims of environmental, social and governance investing. In Europe, a review over the summer indicated that asset managers may have to downgrade hundreds of ESG funds in the coming months.

Chart of the Day

Private-sector activity in the euro zone contracted for a fourth month in October, reinforcing expectations that the bloc is headed for a recession. An index of purchasing managers compiled by S&P Global slumped to its lowest level since April 2013, barring months when there were Covid-19 lockdowns. That was worse than economists had anticipated as record inflation hurts demand and some firms rein in production on weaker sales.

Today's Agenda (All times CET.)

• 9 a.m. Commission President Von der Leyen and German Chancellor Scholz open Ukraine reconstruction conference in Berlin
• 2:40 p.m. NATO chief Jens Stoltenberg holds press conference on board the USS George H.W. Bush
• 4:30 p.m. European Parliament panel holds hearing on Uber, lobbying and workers’ rights
• EU-Japan High Level Economic Dialogue takes place, with participants including EVP Valdis Dombrovskis and Financial Regulation Commissioner Mairead McGuinness