Russian President Vladimir Putin has threatened “catastrophic consequences” for world energy markets if western powers impose further sanctions on Moscow, as G7 members discuss plans to try to cap Russia’s oil revenues following its invasion of Ukraine.
The Russian president admitted that sanctions were undoubtedly hurting Russia’s economy but said western powers stood to inflict more harm on themselves as they wrestle with rising inflation and a growing cost of living crisis.
“All this reveals, once again, that sanctions on Russia end up causing much more harm to those countries that impose them,” Putin told members of the government in a televised address on Friday.
“The further use of sanctions could lead to even more severe consequences, even, without exaggeration, catastrophic consequences on the global energy market,” he said.
His comments will increase concerns that Russia could look to disrupt oil supplies if G7 members move ahead with plans to try to cap the price Russia can receive for its crude, the primary source of government revenues.
The oil industry fears Russia could look to cut oil exports in retaliation if the G7 pushes ahead with its plan. Analysts at JPMorgan have warned that oil prices could soar towards $380 a barrel if Moscow slashed exports as “a way to inflict pain on the west”.
Russia has already been accused by European officials of weaponizing gas exports after it cut capacity on the Nord Stream 1 pipeline to Germany by 60 percent last month. The International Energy Agency has warned Europe to prepare for a complete cut-off of Russian gas supplies this winter, with possible rationing of fuel to industry and even homes.
Gas prices have almost doubled in the last three weeks and on Friday Uniper, Germany’s biggest buyer of Russian gas, sought a multibillion-euro bailout from Berlin, warning that supplies to Europe’s largest economy are under threat.
Households in the UK have been told to prepare for further sharp increases in energy bills this winter, with the price cap for domestic electricity and gas bills predicted to soar towards 23,400 per annum for the average household, three times the level in 2020.