‘A rejection of Russian oil would lead to catastrophic consequences for the global market,’ said a deputy prime minister.
Oil prices are soaring, hitting 13-year highs Monday. And if Russian Deputy Prime Minister Alexander Novak is right (a big if), we may have seen nothing yet.
If the U.S. and Europe follow through on threats to bar Russian oil imports, prices would skyrocket, he said in a statement on Russian state television, Reuters reports.
“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.”
He presumably was referring to the global benchmark Brent crude price, which touched a high of $139.13 a barrel Monday and recently traded at $132. the U.S. WTI oil price recently traded at $128.07.
Knowledgeable sources told Bloomberg that the U.S. and U.K. will slap a ban on imports of Russian energy products, but that the America’s European allies won’t follow suit. The U.S. gets only 3% of its crude oil from Russia, but more than 25% of the European Union’s crude comes from Russia.
Novak said Europe would need over a year to obtain elsewhere the amount of oil it gets from Russia now. “European politicians need to honestly warn their citizens and consumers what to expect,” he 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.”
Meanwhile, experts say the war in Ukraine will send inflation sky high. In addition to oil, Russia is a major exporter of metals and agricultural commodities, and Ukraine has exports in those categories too. Prices for these commodities are racing upward.
