A number of bullish factors…
Continued oil and gas exports…
Russian President Vladimir Putin has instructed Gazprom, the central bank of Russia, and the Russian government to come up with a report by the end of March on how to change the payment for Russian gas to rubles for customers who are part of Putin’s so-called “unfriendly” countries list.
“The Russian government together with the Bank of Russia and Gazprom PJSC should implement a set of measures on changing the currency of payment for natural gas supplies to the countries of the European Union and other states that imposed restrictive measures against the citizens of the Russian Federation and Russian legal entities, to the Russian ruble,” according to a Kremlin document cited by Russian news agency TASS.
Putin has also ordered the Russian government to approve a move on changing Gazprom’s current contracts to reflect the change in the currency to the Russian ruble. This should be done “with supply volumes, prices and price formation principles stipulated by contracts maintained” by March 31, TASS reported.
Last week, Putin said that Russia would start charging the countries it considers “hostile” in rubles for its natural gas.
“I have taken a decision to switch to ruble payments for our natural gas supplies to the so-called hostile states, stop using the compromised currencies in such transactions,” Putin said.
Related: Rationing Looms As Diesel Crisis Goes Global
The Russian President—whose list of “hostile” states includes the United States, all EU member states, Switzerland, Canada, Norway, South Korea, Japan, and many others—has ordered the Bank of Russia, the central bank, to develop a system for payments in rubles within a week.
Commenting on Putin’s rubles-for-Russian-gas plan, the EU and leaders of the biggest economies in Europe said that changing the currency of the payments would be a breach of contract and that Europe would not be blackmailed into buying gas with rubles.
“There are fixed contracts everywhere, with the currency in which the deliveries are to be paid being part of these contracts... in most cases it says euros or dollars,” German Chancellor Olaf Scholz said last week. Italy’s Prime Minister Mario Draghi noted that “This is basically a breach of contract, this is important to understand.”
European Commission President Ursula von der Leyen said that “We will not allow our sanctions to be circumvented. The time when energy could be used to blackmail us is over.”
By Charles Kennedy for Oilprice.com
More Top Reads From Oilprice.com:
Charles is a writer for Oilprice.com