Russia threatens to cut gas to Europe and push oil prices to $300 a barrel if West imposes embargo

Russia has warned it could cut gas to Europe if Western states go ahead with a ban on the export of its oil over the Ukraine invasion.

Deputy Prime Minister Alexander Novak said Russia had "every right [...] to impose an embargo on gas pumping through the Nord Stream 1 gas pipeline", following almost universal condemnation of its brutal assault on Ukraine.

Russia warns West of $300 per barrel oil, cuts to EU gas supply https://t.co/6htUsAMv7v pic.twitter.com/sTF3hT7nXc

— Reuters (@Reuters) March 7, 2022

The Nord Stream 1 is the gas pipeline that has been delivering Russian gas to Europe for more than a decade.

The EU receives nearly 45 percent of its gas from Russia according to the International Energy Agency, and has no easy substitute - cutting off its supply could have catastrophic consequences.

Some countries such as Moldova and Hungary are almost completely reliant on Russian gas.

Novak pointed at Germany's decision to halt the opening of the second such pipeline, the  Nord Stream 2, in response to Russia's actions in Ukraine  as justification if Moscow chose to cut off Europe's gas.

He added that "rejection of Russian oil would lead to catastrophic consequences for the global market".

The price of oil is already at $140, the highest since 2008. The ban on Russian oil could push prices to more than $300 a barrel, he threatened. 

OPEC has no control over the events that have led to the run up in global oil prices and there is not enough capacity worldwide to compensate for the loss of Russian supply, OPEC Secretary General Mohammad Barkindo said https://t.co/ZUscqCVIKs pic.twitter.com/8r0cjye6UP

— Reuters (@Reuters) March 8, 2022

The Secretary General of the Organisation of the Petroleum Exporting Countries (OPEC)  Mohammad Barkindo called the threat of an oil embargo a "crisis" on Tuesday, adding that it is already affecting the energy market.

"There is no capacity in the world at the moment that can replace 7 million barrels of exports," he added.  

On Monday, EU Green Deal chief Frans Timmermans told the European Parliament that it was possible to wean Europe off Russian energy by the end of the year.

"It's not easy but it's feasible," he said. "Given the fact that the energy markets will be tight for the foreseeable future, creating your own energy resources is strategically the smartest and the most urgent choice."

Russia is a major global player in the energy industry. It is the world’s biggest producer of natural gas and the second-biggest producer of crude oil.

Any sanctions against its energy industry could be devastating not just for its own economy but for the world if no replacement is found.