Russia’s deputy prime minister has warned that a ban on his country’s oil could send the price of a barrel beyond $300, as he also threatened to cut a vital gas pipeline to Europe.
“It is absolutely clear that a rejection of Russian oil would lead to catastrophic consequences for the global market,” Deputy Prime Minister Alexander Novak said on state television late Monday, according to media reports
“The surge in prices would be unpredictable. It would be $300 per barrel if not more,” he said.
U.S. crude prices
briefly pushed above $130 a barrel on Monday after Secretary of State Antony Blinken on Sunday said the U.S. and its allies were considering a ban on Russian imports in response to that country’s invasion of Ukraine. Those highs were pared after German Chancellor Olaf Scholz said his country would continue to buy Russian oil, gas and coal, essential for daily living.
The White House also said on Monday that no decision had been made on such a ban.
But both U..S. and Brent crude
remained elevated on Tuesday, at $122 and $127 a barrel, respectively.
Read: Bipartisan group of lawmakers pushes not just for ban on Russian oil, but broad trade halt
In the same address, Novak said that his country has every right to cut off the Nord Stream 1 key gas pipeline between Russia and Germany, after the imposition of a ban on Nord Stream 2.
He said European leaders must prepare their citizens to pay much higher prices and that the region would struggle to replace that volume in a year. “If you want to reject energy supplies from Russia, go ahead. We are ready for it. We know where we could redirect the volumes to,” said Novak.
The EU received 45% of its natural-gas imports from Russia last year, according to the International Energy Agency. Germany gets over half its gas from Russia and a quarter of its oil. The U.S., meanwhile produces its own natural gas.
“Europe’s supply of energy for heating, for mobility, for electricity generation and for the industry can’t be secured otherwise at the moment,” said Scholz on Monday.
European gas price surged on Monday, with the benchmark Dutch TTF natural-gas contract climbing 47% to €283.43 per megawatt hour on Monday, $522 per barrel of oil equivalent.
The West and its allies have been piling sanctions on Russia, following that country’s Ukraine invasion two weeks ago. But energy exports have been exempt from sanctions given Western Europe’s heavy reliance on Russian energy flows. Russian oil, meanwhile, has struggled to find buyers.
“So far we are not taking such a decision,” said Novak. “But European politicians with their statements and accusations against Russia push us toward that.”
Read: What soaring oil prices mean for the stock market as Dow tumbles into correction
The European Union is expected to announce a plan Tuesday to cut its dependence on Russian energy by two-thirds, the Financial Times reported. Frans Timmermans, European Green Deal commissioner, said that the region could import more liquefied natural gas and speed up renewable energy generation, among other measures.
Read: Europe scrambles to reduce its dependency on Russian energy
Last week, the IEA released a 10-point plan laying out how the region could wean itself off Russia supplies by over a third.
That includes not signing new gas supply contracts with Russia, and replacing those supplies with alternative sources, introducing minimum gas storage obligations, accelerating wind and solar projects and boosting power generation from bioenergy and nuclear.
Also read: ‘Americans have never seen gasoline prices this high — nor have we seen the pace of increases so fast and furious’: Gas tops $4 a gallon
Amid rising deaths and destruction in his country from the Russian onslaught, and with no diplomatic solution in sight, Ukrainian Foreign Minister Dmytro Kuleba again pleaded for the West to cut its Russian energy reliance on Monday.
“Stop buying Russian gas and oil…because right now Russian oil smells of Ukrainian blood,” Kuleba reportedly said.