Russia is threatening to cut Germany and Europe off from its natural gas supply if the western nations ban its oil exports, the BBC reported Tuesday.
According to the report, Russian Deputy Prime Minister Alexander Novak warned that banning Russian oil exports would dramatically raise prices to $300 per barrel and Russia could decide to cut Germany and other European nations off from the Nord Stream 1 natural gas pipeline.
"[It will be] impossible to quickly find a replacement for Russian oil on the European market," he said during an address on Russian state television, the BBC reported. "It will take years, and it will still be much more expensive for European consumers. Ultimately, they will be hurt the worst by this outcome. We have every right to take a matching decision and impose an embargo on gas pumping through the [existing] Nord Stream 1 gas pipeline."
The Russian warning comes as western nations contemplate punishing Russia for its invasion of Ukraine by banning the sale of its oil, which supplies 30% of the European Union’s demand.
The bigger problem for Europe is natural gas with Russia provides 40% of the demand, according to the report.
Iain Conn, the former owner of Centrica, parent company of British Gas, told the BBC that gas would be harder to replace because it is "less freely" traded compared to oil.
Volatility in the oil market due to the invasion and economic sanctions taken against Russia have caused the highest oil prices since 2008, Reuters reported.
The spike in price came following U.S. Secretary of State Antony Blinken announcing discussions between the United States and its European allies about possibly banning the sale of Russian oil imports.
"It is absolutely clear that a rejection of Russian oil would lead to catastrophic consequences for the global market," Novak said. "The surge in prices would be unpredictable. It would be $300 per barrel if not more."
In the United States, gasoline hit a record high price of $4.17 per gallon, breaking the previous record of $4.11 per gallon in 2008, CNN reported Tuesday.
The price rose 55 cents in the last week, and has increased 18%, or 63 cents, since Russia invaded Ukraine on Feb. 24.
Tom Kloza, global head of energy analysis for the OPIS told CNN that prices will continue to rise, and eventually get to the consumer at the pump.
"I think we'll hit $4.50 a gallon before it turns around," Kloza told CNN. "The risk is how bad this gets, how long this goes on. Even $5 a gallon nationwide is possible. I wouldn't have predicted that before the fighting started."
Related Stories:
© 2024 Newsmax. All rights reserved.