Putin wants &lsquo unfriendly&rsquo countries to pay for Russian gas in rubles

• European countries&rsquo dependence on Russian gas and other exports has been thrown into the spotlight since Moscow&rsquo s Feb. 24 invasion of Ukraine and the subsequent imposition of Western sanctions aimed at isolating Russia economically.
• &ldquo Russia will continue, of course, to supply natural gas in accordance with volumes and prices ... fixed in previously concluded contracts,&rdquo Putin said at a televised meeting with top government ministers.
• Russian gas accounts for some 40% of Europe&rsquo s total consumption and EU gas imports from Russia have fluctuated between 200 million to 800 million euros ($880 million) a day so far this year.
• Russia will seek payment in rubles for gas sales from &ldquo unfriendly&rdquo countries, President Vladimir Putin said on Wednesday, sending European gas prices soaring on concerns the move would exacerbate the region&rsquo s energy crunch.
• 
  
  European countries&rsquo dependence on Russian gas and other exports has been thrown into the spotlight since Moscow&rsquo s Feb. 24 invasion of Ukraine and the subsequent imposition of Western sanctions aimed at isolating Russia economically.

   

  
  
  &ldquo Russia will continue, of course, to supply natural gas in accordance with volumes and prices ... fixed in previously concluded contracts,&rdquo Putin said at a televised meeting with top government ministers.
  
  &ldquo The changes will only affect the currency of payment, which will be changed to Russian rubles,&rdquo he said.
  
  Russian gas accounts for some 40% of Europe&rsquo s total consumption and EU gas imports from Russia have fluctuated between 200 million to 800 million euros ($880 million) a day so far this year. The possibility a change of currency could throw that trade into disarray sent some European and British wholesale gas prices up around 15-20% on Wednesday.
  
  The Russian ruble briefly leapt to a three-week high past 95 against the dollar before settling close to 100 after the shock announcement.
  
  Putin said the government and central bank had one week to come up with a solution on how to move these operations into the Russian currency and that gas giant Gazprom would be ordered to make the corresponding changes to gas contracts.

   

  
  
  With major banks reluctant to trade in Russian assets, some big Russian gas buyers in the European Union were not immediately able to clarify how they might pay for gas going forward.
  
  &ldquo At the moment, we do not yet wish to comment. We will be in touch once we have formed an opinion,&rdquo said a spokesman at Germany&rsquo s Uniper.
  
  Moscow calls its actions in Ukraine a &ldquo special military operation&rdquo to disarm and &ldquo denazify&rdquo its neighbour. Ukraine and Western allies call this a baseless pretext for a war of choice that has raised fears of wider conflict in Europe.

  A breach of rules

  
  
  According to Gazprom, 58% of its sales of natural gas to Europe and other countries as of Jan. 27 were settled in euros. U.S. dollars accounted for about 39% of gross sales and sterling around 3%.
  
  The European Commission has said it plans to cut EU dependency on Russian gas by two-thirds this year and end its reliance on Russian supplies of the fuel &ldquo well before 2030&rdquo .
  
  But unlike the United States and Britain, EU states have not agreed to sanction Russia&rsquo s energy sector, given their dependency. The Commission, the 27-country EU&rsquo s executive, did not immediately respond to request for comment.
  
  There are questions over whether Russia&rsquo s decision constitutes a breach of contract rules.
  
  &ldquo This would constitute a breach to payment rules included in the current contracts,&rdquo said a senior Polish government source, adding that Poland has no intention of signing new contracts with Gazprom after their current long-term agreement expires at the end of this year.
  
  Russia drew up a list of &ldquo unfriendly&rdquo countries, which corresponds to those that imposed sanctions. Among other things, deals with companies and individuals from those countries have to be approved by a government commission.
  
  The list of countries includes the United States, European Union member states, Britain, Japan, Canada, Norway, Singapore, South Korea, Switzerland and Ukraine.
   

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Oil Rises as NATO, EU Summits Raise Specter of New Russia Curbs

Commodities1 hour ago (Mar 22, 2022 10:00PM ET)

(Bloomberg) -- Oil ticked higher ahead of a flurry of high-level diplomatic activity over the month-old war in Ukraine that may see fresh curbs on Russia.

West Texas Intermediate climbed toward $110 a barrel after giving up early gains on Tuesday to end slightly lower. European Union and NATO leaders are set to gather in Brussels on Thursday to beef up their response to the crisis. Ahead of the meetings, White House National Security Adviser Jake Sullivan said that the U.S. and its allies will impose further sanctions on Moscow.

In the physical market, a key Kazakh-Russian oil pipeline may be forced to reduce shipments via a vital Black Sea terminal by as much as 1 million barrels a day for several weeks due to storm damage. In the U.S., meanwhile, the industry-funded American Petroleum Institute said crude inventories sank by 4.3 million barrels last week, according to people familiar with the data.

Oil has been boosted by Russia&rsquo s invasion, retaliatory penalties and the fact that much of the industry is effectively self-sanctioning. The possibility of the EU curbing Russian crude has been raised, although members including Germany are opposed. Sullivan said Biden will announce joint action on energy security and moves to cut Europe&rsquo s dependence on Russian  natural gas.

&ldquo The market is definitely keeping a close eye on the discussions going on in Europe,&rdquo said Daniel Hynes, senior commodities strategist at Australia & New Zealand Banking Group (OTC:ANZBY) Ltd. &ldquo It will be a game changer if the EU strengthens its sanctions to include Russian oil.&rdquo

Crude markets remain severely backwardated, a bullish pattern characterized by near-term prices trading above longer-dated ones. Brent&rsquo s prompt spread -- the difference between its two nearest contracts -- was $3.69 a barrel, up from $2.38 a week ago and 41 cents at the start of the year. 

With many buyers shunning Russian crude, the country&rsquo s flagship Urals grade has plunged, while some April-loading shipments were canceled. That&rsquo s adding to the signs of increased pressure on the nation&rsquo s oil market.

© 2022 Bloomberg L.P.

Oil prices resume climb after U.S. stockpiles drop in tight market

By Sonali Paul

MELBOURNE (Reuters) - Oil prices turned higher on Wednesday, erasing losses from the previous session, after industry data showed  U.S. crude  stocks fell last week, underlining how tight global supplies are amid the hit to Russian output from economic sanctions on Moscow.

Brent crude  futures climbed $1.06, or 0.9%, to $116.54 a barrel at 0213 GMT, after falling 14 cents in the previous session.

U.S. West Texas Intermediate (WTI) crude futures rose 87 cents, or 0.8%, to $110.14 a barrel, after losing 36 cents on Tuesday.

While prices dipped on Tuesday as it appeared the European Union was unlikely to agree to a ban on Russian oil, the market remains on edge over the prospect of further sanctions on Russia when U.S. President Joe Biden meets with European leaders on Thursday to discuss Russia' s invasion of Ukraine, actions that Moscow calls a " special operation" .

Supply remains tight. The latest data from the American Petroleum Institute industry group showed crude stocks fell by 4.3 million barrels for the week ended March 18, according to market sources, which defied analysts' forecasts for an increase. [API/S]

Nine analysts polled by Reuters on average had estimated crude inventories rose by 100,000 barrels in the week to March 18.

 

" The U.S. and Saudi Arabia are the two nations that can meaningfully offset the loss of Russia' s oil.  Extra supply from either seems unlikely right now but we are in a highly unusual situation and that makes everything more fluid," Commonwealth Bank analysts said in a note.

Official U.S. inventory data is due from the Energy Information Administration on Wednesday. Commodities1 hour ago (Mar 22, 2022 10:38PM ET)