Putin warns West: sanctions risk energy price spike catastrophe
By Man Faulconbridge
LONDON (Reuters) -President Vladimir Putin warned the West on Friday that continued sanctions in opposition to Russia over the struggle in Ukraine risked triggering catastrophic power value rises for customers world wide.
Putin, who casts the sanctions imposed on Russia as a declaration of financial struggle, mentioned that Western calls to scale back reliance on Russian power had made international markets “feverish” with spikes in oil and fuel.
European Union prospects have mentioned they wish to wean themselves off Russian fuel whereas Group of Seven leaders mentioned final month that they wished to discover “value caps” on Russian fossil gas, together with oil.
“Sanctions restrictions on Russia trigger rather more harm to these international locations that impose them,” Putin informed the leaders of Russia’s oil and fuel business, together with Rosneft Chief Government Igor Sechin and Deputy Prime Minister Alexander Novak.
“Additional use of sanctions could result in much more extreme – with out exaggeration, even catastrophic – penalties on the worldwide power market.”
Putin’s Feb. 24 invasion of Ukraine and the West’s imposition of probably the most extreme sanctions in trendy historical past have undermined the assumptions of the power and commodities markets – whereas crimping international development.
As Putin grapples with a significant struggle, the largest geopolitical disaster and the largest Russian financial problem because the 1991 fall of the Soviet Union, the 69-year-old Kremlin chief has repeatedly signalled he’s in no temper to again down.
Vitality is one space the place the Kremlin nonetheless holds sway – and European powers together with Germany concern he could also be about to chop provides.
Russia is the world’s second largest oil exporter after Saudi Arabia, the world’s largest exporter of pure fuel and the world’s largest wheat exporter. Europe imports about 40 p.c of its fuel and 30 p.c of its oil from Russia.
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With costs already rising, the world is bracing for additional provide disruption from Russia: The Nord Stream 1 pipeline underneath the Baltic, an important provide path to Germany, is because of endure upkeep from July 11 to July 21.
Gazprom lower capability by way of the pipeline to only 40%, citing the delayed return of apparatus being serviced by Germany’s Siemens Vitality in Canada because of sanctions.
The Caspian Pipeline Consortium (CPC), which carries about 1% of world oil, was ordered by a Russian court docket to droop operations on Tuesday. Flows proceed, however it’s unclear for the way lengthy.
“We all know that the Europeans try to switch Russian power sources,” Putin mentioned. “Nonetheless, we count on the results of such actions to be a rise in fuel costs on the spot market and a rise in the price of power sources for finish customers.”
In the previous couple of months, Russia has lower off fuel flows to Bulgaria, Poland, Finland, Danish provider Orsted, Dutch agency Gasterra and Shell for its German contracts, after all of them rejected a requirement to change to funds in roubles in response to European sanctions.
Putin mentioned that the West’s financial “blitzkrieg” had failed however admitted harm had been finished to the $1.8 trillion economic system.
“We should always really feel assured in ourselves however you must see the dangers – the dangers are nonetheless there,” Putin mentioned.
Putin mentioned the scenario on the Russian gas and power sector remained secure, citing a rise in oil and fuel condensate output to 10.7 barrels per day in June.
However he mentioned Russian power corporations ought to put together for an EU oil embargo set to return into drive across the finish of the yr.
“The federal government is at the moment contemplating choices to develop the railway and pipeline infrastructure to produce Russian oil and oil merchandise to pleasant international locations,” Putin mentioned.
(Writing by Man Faulconbridge; enhancing by Jonathan Oatis)
