Russia has threatened to close a major gas pipeline to Germany and warned of $300 oil prices if the West goes ahead with a ban on its energy exports.
“It is absolutely clear that a rejection of Russian oil would lead to catastrophic consequences for the global market,” Russian Deputy Prime Minister Alexander Novak said Monday in an address on state television.
“The surge in prices would be unpredictable. It would be $300 per barrel if not more.”
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Novak also cited Germany’s decision last month to halt the certification of the highly contentious Nord Stream 2 gas pipeline, saying: “We have every right to take a matching decision and impose an embargo on gas pumping through the Nord Stream 1 gas pipeline.”
“So far, we are not taking such a decision,” Novak said. “But European politicians with their statements and accusations against Russia push us towards that.”
His comments come with Russia’s onslaught of Ukraine well into its second week, with the already dire humanitarian crisis expected to worsen as the Kremlin continues its invasion.
The U.N. has said 1.7 million refugees have left Ukraine since Russia’s invasion of the country began on Feb. 24, describing it as “the fastest-growing refugee crisis in Europe since World War II.”
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The U.S. has been considering whether to impose a ban on Russia’s oil and gas exports as a way of punishing Moscow.
Germany, the Netherlands and the U.K. have appeared to back away from a coordinated Western embargo on Russian energy exports, however.
Energy analysts have warned that a ban on Russia’s oil and gas would have seismic repercussions for energy markets and the world economy.
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Russia is the world’s third-largest oil producer, behind the U.S. and Saudi Arabia, and the world’s largest exporter of crude to global markets. It is also a major producer and exporter of natural gas.
The European Union receives around 40% of its gas via Russian pipelines, several of which run through Ukraine.
“European politicians need to honestly warn their citizens and consumers what to expect,” Novak said.
“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,” he added, without providing further details.
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Oil prices soared to 14-year highs on Monday, as energy market participants focused on the prospect of full sanctions on Russia’s energy exports.
International benchmark Brent crude futures rose 2.1% to trade at $125.75 a barrel on Tuesday morning in London, while U.S. West Texas Intermediate futures were 2% higher at $121.83.
European policymakers are under immense pressure to bring a swift end to their dependence on Russian fossil fuels, particularly as energy-importing countries continue to refill President Vladimir Putin’s war chest with oil and gas revenues on a daily basis.
Indeed, revenue from Russian oil and gas was seen to be responsible for roughly 43% of the Kremlin’s federal budget between 2011 and 2020, highlighting how fossil fuels play a central role for the Russian government.
Ukraine Foreign Minister Dmytro Kuleba has called on Western allies to impose a “full embargo” on Russian oil and gas, saying via Twitter that “buying them now means paying for the murder of Ukrainian men, women and children.”
U.S. Secretary of State Antony Blinken told NBC on Sunday that President Joe Biden’s administration was in “very active discussions” with European governments about banning imports of Russian crude and natural gas.
Western sanctions imposed on Russia over the invasion have so far been carefully constructed to avoid directly hitting the country’s energy exports, although there are already signs the measures are inadvertently prompting banks and traders to shun Russian crude.
German Chancellor Olaf Scholz on Monday pushed back against calls to ban Russian oil and gas, saying that such a move could put Europe’s energy security at risk and energy imports from Russia were critically important to citizens’ daily lives.
Speaking at a press conference on Monday, U.K. Prime Minister Boris Johnson appeared to align himself with Germany’s Scholz in backing away from plans to impose an oil embargo on Russia.
“You can’t simply close down use of oil and gas overnight, even from Russia. That’s obviously not something that every country around the world can do,” Johnson said.
Dutch Prime Minister Mark Rutte, meanwhile, said at the same press conference that cutting Russian oil and gas imports would need to be a “step-by-step process.”
“We have to make sure to deleverage our dependency on Russian gas, on Russian oil, while acknowledging at the moment that the dependency is, to a certain extent, still there,” Rutte said.
The European Union on Tuesday is set to outline a raft of measures designed to reduce the bloc’s reliance on Russian gas.
Meanwhile, the world’s leading climate scientists delivered a landmark reportlast week that reaffirmed the urgent need to rapidly phase out fossil fuels in order for humanity to avoid the worst impacts of the climate crisis.
U.N. Secretary-General António Guterres described the Intergovernmental Panel on Climate Change’s report on the real-world impacts of the climate emergency as an “atlas of human suffering.”
Guterres said the IPCC’s findings once again make it clear that “fossil fuels are choking humanity.”