European Union (EU) members agreed Monday to create a price control mechanism for natural gas traded in the bloc after months of negotiation and debate on whether a policy to protect against market volatility could limit much needed LNG supply.

The majority of leadership from the 27-country EU agreed to institute what Czech Industry and Trade Minister Jozef SÍkela called a “dynamic” price cap that could be triggered as soon as Feb. 15. Adoption and clarifications for the policy are expected to be finalized in the coming days, according to the EU energy ministry. 

Under the agreed mechanism, a cap on gas prices would be triggered by two events. The first would be the month-ahead price for the Dutch Title Transfer Facility contract reaching above 180 euros/MWh, around...