Russian President Vladimir Putin demanded on Wednesday that “unfriendly countries” use rubles to buy his country’s oil and gas — an announcement that sent energy prices soaring further as markets remain roiled by his military’s assault on Ukraine.
Russia was hit with crippling economic sanctions after it launched a massive military campaign against Ukraine a month ago.
But efforts to isolate Russia economically are complicated by the fact that the European Union is dependent on Moscow for oil and natural gas that is used to heat homes during the winter.
With the financial noose tightening and the European Union split on whether to sanction Russia’s energy sector, Putin hit back with a clear message: If you want our gas, buy our currency.
“Russia will continue, of course, to supply natural gas in accordance with volumes and prices … fixed in previously concluded contracts,” Putin said at a televised meeting with top government ministers.
“The changes will only affect the currency of payment, which will be changed to Russian rubles,” he said.
Russian gas accounts for some 40% of Europe’s total consumption and EU gas imports from Russia.
The possibility that a change of currency could throw that trade into disarray sent some European wholesale gas prices up to 30% higher on Wednesday.
The ruble briefly leaped to a three-week high past 95 against the dollar and, despite paring some gains, stayed well below 100 after the shocking announcement. The currency is down around 20% since Feb. 24.
“At face value this appears to be an attempt to prop up the Ruble by compelling gas buyers to buy the previously free-falling currency in order to pay,” Vinicius Romano, senior analyst at consultancy Rystad Energy, told Reuters.
With Post wires
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