Lithuania had put itself in a standoff with Russia by blocking the transit of many essential goods to its Kaliningrad enclave. Russia had threatened reprisals.
Now the EU is telling Lithuania to back down.
This is a sign that EU leaders are no longer willing to punish Russia further for the invasion of Ukraine. It's a sign that they're trying to make a deal for Russia to keep the natural gas taps open.
We will have to wait until July 21 to find out what will happen to natural gas flows but this is a good sign, and is good for the euro, by extension.
EUR /USD is steady at 1.0038 with all the focus on monetary policy at the moment.
Update: Russia's Gazprom is also now out with a statement saying it cannot guarantee good functioning of the Nord Stream pipeline.
It's an insane exercise to try to put yourself in Putin's shoes but cutting off gas would be a dramatic step and might be counterproductive to his aims of consolidating territory in Ukraine and eventually getting peace. By keeping the pipeline open -- but limiting flows -- he keeps his trump card while keeping Europe's economy on the brink.
