With energy sanction threats hitting Russia from western countries due to its attack on Ukraine, the “motherland” country has warned that Europe is pushing towards an embargo that could send on price over $300 per barrel.
According to Interfax, Alexander Novak, Russia Prime Minister, stated that a ban on Russian oil would have catastrophic consequences for the global market, warning that Europe is pressuring Russia to impose an embargo on gas deliveries through Nord Stream 1, which is currently at capacity, despite Moscow’s refusal.
A statement that could be seen as a counteraction to reports that the US is set to vote as soon as Tuesday on a proposal to sever trade ties with Russia and Belarus, including the suspension of oil imports, despite repeated objections from Germany, which has stated that a supply shortage threatens “social cohesion,”
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Novak warned that an embargo on gas deliveries through Nord Stream 1 would benefit “no one,” and that replacing Russian oil deliveries to Europe would take more than a year.
He also warned that a global embargo on Russian oil could push prices above USD 300/bbl, despite the fact that Russia knows where it will re-direct oil if Europe and the US refuse it.
In response to a potential ban on Russian oil, Goldman’s commodities team wrote overnight that Europe’s reliance on Russian oil imports, of which c. 4.3 mb/d comes via pipeline, suggests that such a coordinated response will likely take time, leaving only the possibility of a US ban in short order.
