Russian President Vladimir Putin has said that he foresees catastrophic energy consequences for Europe as EU members squeeze his country teething sanctions.
“We know that the Europeans are trying to replace Russian energy resources. However, we expect the result of such actions to be an increase in gas prices on the spot market and an increase in the cost of energy resources for end consumers,” Putin said at a televised meeting with senior officials last Friday.
The Ukraine aggressor said the outcome will be that the sanctions will be felt more acutely by Europe than by Russia. “Further use of sanctions may lead to even more severe—without exaggeration, even catastrophic—consequences on the global energy market,” Putin said.
Europe has struggled to find a surefire way to punish Russia for its invasion of Ukraine without feeling the pain itself, given that Europe has relied on Russia for roughly 40% of its natural gas needs.
Major European economies such as Germany are already grappling with power company bankruptcies as they source higher-cost natural gas from sources other than Russia.
Europe is making a mad dash to refill its natural gas in storage before the 2022 heating season kicks in, but it is finding that those stocks are coming at a steep price.
Russia has already cut off the natural gas spigot to “unfriendly” countries that have failed to make arrangements to pay for Russia’s gas with a rubles account with Gazprombank.
Bulgaria, Finland, and Poland have all had the flow of gas from Russia cut off, along with numerous buyers such as Orsted and Shell.
Europe is now mulling a price cap on Russian oil to punish Russia by restricting its revenues while maintaining its supply of crude, but the details are complex and would require buy-in from other countries, including China and India. Critics of the plan suggest that such a plan is nonsense and has little chance of working.