Russian Central Bank Governor, Elvira Nabiullina, has said that the country would assess the impact of the Western oil embargo, and could consider retaliation in early next year.
She told a news conference last weekend that it would be difficult to fully appreciate the impact the Western embargo, typified by the price cap on Russian gas, will have on the Russian economy, and that Moscow will explore options in February when more information is available.
“There will also be more information, including about any retaliatory actions from the Russian side,” She said. “We will take all this into account in February.”
The US and its allied in the G7, as well as the European Union visited the Russian state with installment sanctions, the latest of which is insurance ban on Russian crude barrels.
Russia is also being barred from receiving shipping services from western companies. The sanctions were commenced on December 5.
The West announced a price cap of $60 per barrel on Russian crude on December 2 after weighing the measure and a price range for months.
However, there have been concerns over the overall effectiveness of the price cap against oil and gas originating from Russia
Some observers are worried that a misplaced price cap could send oil prices soaring higher in an already tight year for energy.
So far, oil prices have continued to slip, with international benchmark Brent crude trading at $78 per barrel at last weekend.
Meanwhile, there have already been shipping disruptions as a result of the EU sanctions. Oil tankers have piled up off the coast of Turkey as ships were asked for proof of insurance coverage.
But Putin had assured that his country’s finances wouldn’t be hit by the new measures, describing the West’s implementation of a price cap as “stupid.”
On the other hand, he warned that energy prices could “skyrocket” for any countries that participated in the price cap.
The defiant remarks come after Russia’s central bank warned that the price cap and latest round of sanctions were “economic shocks” to the nation.
Last Monday, the EU’s embargo on seaborne Russian oil imports took effect, along with a $60-a-barrel price cap on Moscow’s crude that is meant to prevent a supply shock and limit Putin’s energy revenue.
Companies that abide by the price cap will be able to use European shipping and insurance services to send oil to Asia, where some countries have been snapping up Russian oil at hefty discounts since the invasion of Ukraine.
Experts suspect that if Russia reduces its oil production, it could rock energy markets, worsening the supply shortage and hiking crude prices even higher.
JPMorgan previously predicts that the scenario could cause oil prices to surge as high as $380 a barrel, though Russia is also reportedly considering a price floor.