# Putin: sanctions risk causing energy price catastrophe for West
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2022-07-08
Category: NEWS
Category URL: https://financedigest.com/category/news
Meta Title: Putin warns of catastrophic energy price rises in Europe
Meta Description: President Vladimir Putin says sanctions on Russia may lead to gas price hikes, impacting European households. Find out more on the latest developments.
URL: https://financedigest.com/putin-sanctions-risk-causing-energy-price-catastrophe-for-westhtml

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MOSCOW (Reuters) – President Vladimir Putin said on Friday that continued sanctions against Russia could lead to catastrophic energy price rises for European households.

Europe has historically relied on Russia for around 40% of its natural gas, most of it delivered through pipelines.

“We know that the Europeans are trying to replace Russian energy resources,” Putin said at a televised meeting with senior officials.

However, we expect the [result of such actions to be an increase in gas prices](https://www.financedigest.com/immediate-lift-of-oxford-property-prices-to-result-from-new-direct-high-speed-rail-connection-with-london.html "“Immediate lift” of Oxford property prices to result from new direct high speed rail connection with London") on the spot market and an increase in the cost of energy resources for end consumers.

All this once again shows that sanctions [restrictions on Russia cause much more damage to those countries that impose](https://www.financedigest.com/chinas-covid-resurgence-spurs-new-curbs-foxconn-imposes-restrictions.html "China’s COVID resurgence spurs new curbs, Foxconn imposes restrictions") them. Further use of sanctions may lead to even more severe – without exaggeration, even [catastrophic – consequences on the global](https://www.financedigest.com/global-economy-weathered-98bn-natural-hazard-loss-in-first-half-of-2016-according-to-aon-catastrophe-report.html "GLOBAL ECONOMY WEATHERED BN NATURAL HAZARD LOSS IN FIRST HALF OF 2016, ACCORDING TO AON CATASTROPHE REPORT") energy market.

European gas prices soared in 2021 as supply failed to keep [pace with demand driven by a recovery](https://www.financedigest.com/euro-zone-recovery-gathers-pace-allays-fears-of-recession-pmi.html "Euro zone recovery gathers pace, allays fears of recession-PMI") from the coronavirus pandemic.

They have leapt again since [Russia sent troops into Ukraine](https://www.financedigest.com/russia-promises-to-scale-down-operations-in-northern-ukraine.html "Russia promises to scale down operations in northern Ukraine") on Feb. 24, and the benchmark spot [price now stands at more than twice its close on Feb](https://www.financedigest.com/euro-zone-inflation-eases-in-feb-but-core-prices-pick-up.html "Euro zone inflation eases in Feb but core prices pick up"). 23.

Russia began reducing gas flows to Europe in the second half of 2021, with [supplies through the three main pipeline](https://www.financedigest.com/keystone-oil-pipeline-restart-timetable-unclear-traders-worry-about-supply.html "Keystone oil pipeline restart timetable unclear; traders worry about supply") routes down around 20% compared with the second half of 2020.

In the last few months, it has cut off flows to Bulgaria, Poland, Finland, Danish supplier Orsted, [Dutch firm](https://www.financedigest.com/varo-energy-buys-80-of-dutch-biogas-firm-aims-to-double-capacity-by-2026.html "Varo Energy buys 80% of Dutch biogas firm; aims to double capacity by 2026") Gasterra and Shell for its German contracts, after they all rejected a demand to switch to payments in roubles in response to European sanctions over the campaign in Ukraine.

Putin said the situation on the Russian [fuel and energy](https://www.financedigest.com/bank-finance-for-cleaner-energy-grows-but-still-lags-fossil-fuels-report.html "Bank finance for cleaner energy grows, but still lags fossil fuels – report") sector remained stable, despite Western sanctions.

But he said Russian energy companies should prepare for a [European Union oil embargo set to come into force](https://www.financedigest.com/european-privacy-watchdog-creates-chatgpt-task-force.html "European privacy watchdog creates ChatGPT task force") around the end of the year.

The government is currently [considering options](https://www.financedigest.com/3-options-to-consider-when-you-owe-the-irs-back-taxes.html "3 Options to Consider When You Owe The IRS Back Taxes") to develop the railway and pipeline infrastructure to supply Russian oil and oil products to friendly countries,” Putin said.

[(Reporting by Reuters; editing by Guy Faulconbridge, Kevin Liffey and John Stonestreet)](https://www.financedigest.com/thomson-reuters-report-reveals-risk-compliance-staff-expect-to-see-significant-benefits-from-artificial-intelligence-ai-and-distributed-ledger-technologies.html "Thomson Reuters Report Reveals Risk & Compliance Staff Expect to See Significant Benefits from Artificial Intelligence (AI) and Distributed Ledger Technologies")


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