Russian President Vladimir Putin signed a decree on Thursday demanding “hostile” importers of natural gas start paying for shipments with rubles by April 1, or have their supplies shut off.
“Unfriendly” countries to Russia have until Friday to open accounts at Russian banks to start making payments in rubles. Under the proposed mechanism, Gazprombank would purchase rubles on the buyers’ behalf, and then transfer them to another account. Putin first warned of the impending move last week, pointing out that western sanctions aimed at seizing Russia’s foreign currency reserves would make payments for natural gas in US dollars or euros counterproductive.
“If such payments are not made, we will consider this a default on the part of buyers, with all the ensuing consequences. Nobody sells us anything for free, and we are not going to do charity either— that is, existing contracts will be stopped,” explained Putin. European countries are now left scrambling to quickly find alternatives to Russia’s gas shipments, but with the global energy market already suffering from worsening shortages and surging prices, the EU may have very limited alternatives.
Germany, which is the most reliant on Russian gas, already invoked an emergency plan that would force consumers and companies to ration energy supplies. “It is important for us not to give a signal that we will be blackmailed by Putin,” said Germany’s Economy Minister Robert Habeck in stubborn defiance. The Biden administration offered to ship some of its LNG supplies via boat, but the paltry shipments will be nowhere near enough to replace Russia’s flows.
So, who’s laughing now?
Information for this briefing was found via Reuters. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.