A top Russian official has warned that a Western ban on Russian oil imports could result in oil prices more than doubling to about $300 per barrel and prompt the closure of the main gas pipeline from Russia to Germany.
In a statement on state television on Monday, Russian Deputy Prime Minister Alexander Novak said it was “absolutely clear that a rejection of Russian oil would lead to catastrophic consequences for the global market”.
“The surge in prices would be unpredictable,” he said. “It would be $300 per barrel if not more.”
The warning came as the United States – seeking to ratchet up the pressure on Moscow over its invasion of Ukraine – said Washington and its European allies were considering banning Russian oil imports.
The White House said US President Joe Biden, who is facing growing calls from US lawmakers to cut off Russia from the money it gets from oil and natural gas exports, discussed the issue during a conference call with his counterparts in France, Germany and the United Kingdom on Monday.
But Biden has not made a decision “at this point”, a spokesperson said.
Western countries have hit Moscow with a wall of sanctions following its assault on Ukraine, with Washington slapping sanctions on exports of technologies to Russian refineries and the Nord Stream 2 that was due to pipe gas from Russia to Germany.
Berlin, which is heavily reliant on Russian crude oil, also froze the certification of that pipeline.
But German Chancellor Olaf Scholz earlier on Monday cautioned against a ban on Russian oil and gas, saying Russian energy imports were “essential” to Europeans’ daily lives.
‘We are ready for it’
Russia supplies 40 percent of Europe’s gas.
It is also the world’s top exporter of crude and oil products combined, with around 7 million barrels per day or about 7 percent of global supply.
Novak, the Russian deputy prime minister, said if Europe were to ban Russian oil and gas, it would take countries on the continent more than a year to replace the volume of oil it receives from Russia and they would have to pay significantly higher prices.
“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.”
Novak said Russia was fulfilling its obligations in full but that it would be entirely within its rights to retaliate against the European Union after Germany froze the certification of the Nord Stream 2.
“In connection with … the imposition of a ban on Nord Stream 2, we have every right to take a matching decision and impose an embargo on gas pumping through the Nord Stream 1 gas pipeline,” Novak said.
“So far we are not taking such a decision,” he said. “But European politicians with their statements and accusations against Russia push us towards that.”
The turmoil has already sent oil prices to their highest levels since 2008.
Early on Monday morning, benchmark US crude surged to $130 a barrel overnight, then moderated to about $119, a 3 percent gain, in afternoon trading. The international price skyrocketed to $139 before falling back to about $123 a barrel.
Just a month ago, prior to the Russian invasion of Ukraine, the US Energy Department had predicted oil would average about $80 a barrel this year.