TEMPO.CO, Jakarta – Russian President Vladimir Putin warned the West that continued sanctions against Russia over the Ukraine war risked fueling the rise in world oil prices. According to him, Western calls to reduce dependence on Russian energy have made global markets volatile due to soaring oil and gas prices.
The European Union has previously said it wants to get rid of its dependence on gas imports from Russia. Leaders of the G-7 group also made it clear last month that they wanted to explore price caps on Russia’s fossil fuels, including oil.
“Restrictions on sanctions against Russia cause more damage to the countries that enforce them,” Putin told leaders of Russia’s oil and gas industry, including Rosneft Chief Executive Igor Sechin and Deputy Prime Minister Alexander Novak, on Friday, July 8, 2022.
“The imposition of further sanctions could lead to more severe, even catastrophic consequences on the global energy market,” Putin said.
Russia is still in control of energy supplies, including to Europe. Russia is the world’s second largest oil exporter after Saudi Arabia, the world’s largest exporter of natural gas and the world’s largest exporter of wheat. Europe imports about 40 percent of gas and 30 percent of oil from Russia.
With the increase in gas prices, the world is prepared to disrupt supplies from Russia. The Nord Stream 1 pipeline under the Baltic, a vital supply route to Germany, will undergo maintenance from July 11 to July 21.
Gazprom (GAZP.MM) cut its pipeline capacity to just 40 percent citing delays in equipment returns by Germany’s Siemens Energy (SIEGn.DE) in Canada due to economic sanctions. The Caspian Pipeline Consortium (CPC), which supplies about 1 percent of global oil supplies, was ordered to suspend operations by a Russian court on Tuesday. The flow of oil is still running although it is not clear for how long.
“Europe is trying to replace Russia’s energy sources,” Putin said. “However we expect such action due to rising gas prices in the spot market and rising costs of energy resources for end consumers.”
In recent months, Russia has cut off gas flows to Bulgaria, Poland, Finland, as well as to Danish supplier Orsted (ORSTED.CO), Dutch company Gasterra and Germany via Shell. Termination was carried out after all refused to pay for oil and gas in rubles.
Putin said that the Western economic “blitzkrieg” had failed. But he acknowledged Russia suffered losses from economic sanctions amounting to US $ 1.8 trillion.
“We have to feel confident, but you have to see the risks are still there,” Putin said.
Putin said the situation in Russia’s fuel and energy sectors remained stable. He referred to the increase in oil and gas condensate production to 10.7 barrels per day in June.
But he said the energy company Russia must prepare for the European Union’s oil embargo which takes effect around the end of the year. “The government is currently considering options to develop rail and pipeline infrastructure to supply Russian oil and oil products to friendly countries,” Putin said.
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REUTERS
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