The Russian president admitted the sanctions were undoubtedly hurting the Russian economy, but said Western powers were about to do more harm to themselves as they grappled with rising inflation and a growing cost-of-living crisis. “All this reveals, once again, that sanctions on Russia end up causing far more damage to those countries that impose them,” Putin told cabinet members in a televised address on Friday. “Further use of sanctions could lead to even more serious consequences, even, without exaggeration, catastrophic consequences on the global energy market,” he said. His comments will raise concerns that Russia may try to cut off oil supplies if G7 members go ahead with plans to try to cap the price Russia can get for its crude, the main source of government revenue. The oil industry fears Russia could cut oil exports in retaliation if the G7 goes ahead with its plan. JPMorgan analysts have warned that oil prices could soar to $380 a barrel if Moscow cuts exports as “a way to inflict pain on the West”. Russia has already been accused by European officials of weaponizing gas exports after cutting the capacity of the Nord Stream 1 pipeline to Germany by 60 percent last month. The International Energy Agency has warned Europe to prepare for a complete shutdown of Russian gas supplies this winter, with the fuel likely to be distributed to industry and even homes. Gas prices have nearly doubled in the past three weeks and on Friday Uniper, Germany’s biggest buyer of Russian gas, sought a multibillion-euro bailout from Berlin, warning that supplies to Europe’s biggest economy were under threat. UK households have been told to prepare for further sharp rises in energy bills this winter, with the price cap for household electricity and gas bills expected to jump to £3,400 a year for the average household, three times the level in 2020. Russia has already signaled its willingness to take action that could disrupt oil supplies. This week a Russian court ordered a 30-day halt to oil export loadings at a Black Sea port that is a key conduit for Kazakhstan’s exports. While oil flows have continued, prices for regional crude grades have risen. In Libya, General Khalifa Haftar, who enjoys Russian backing along with support from Egypt, has also stepped up a military campaign that has disrupted the country’s oil and gas exports in recent weeks. “We’ve already seen Russia cut gas flows to Europe and threaten oil exports from Kazakhstan,” said Amrita Sen of analysts Energy Aspects. “It would be foolish to rule out further Russian action if the West increases sanctions.” International oil prices fell last month as recession worries overshadowed a threat to supplies, but they remain above $100 a barrel, a level they haven’t traded at since 2014. On Friday, Brent crude rose 1.2% to $106 a barrel. Putin said Western countries were trying to persuade other energy producers to increase output to keep prices down “but the energy market,” he said, “doesn’t tolerate such fuss.” US President Joe Biden is due to travel to Saudi Arabia next week, where demands for more oil production from Gulf states are expected to be on the table as part of wider security talks in the region. Riyadh has stepped up planned output increases under an agreement by OPEC+ oil producers but has not added significant extra volumes to the market, warning it does not have unlimited spare capacity. People familiar with the kingdom’s thinking say they worry that Russia’s output could fall sharply later this year under Western sanctions. Putin claimed that the “economic blitzkrieg” attempted by Russia’s enemies had “obviously failed”, but admitted that the sanctions had hurt the economy. He said Russian oil production had risen this year despite the sanctions, rising 3.5 percent year-to-date, while natural gas output fell 2 percent.
