The European Commission (EC) has proposed a bloc-wide ceiling on natural gas prices linked to Europe’s benchmark in an effort to stanch massive financial volatility, potentially sending ripple effects across global gas markets.

In a proposal outlined by the European Union’s (EU) executive branch Tuesday, the Commission could institute a “safety price” mechanism by the beginning of the year that would allow regulators to order financial institutions not to accept prompt month gas purchases that exceed the emergency price ceiling.

The mechanism would be triggered if the prompt Dutch Title Transfer Facility (TTF) price rises above 275 euros/MWh, or about $83/MMBtu, for more than two weeks. The mechanism would also be triggered if TTF prices are 58 euros or roughly $17 more...