Russia Moves to Destroy the Petrodollar, Demands Countries Pay in Rubles for Gas
The ruble is going from strength to strength
As Russia faces crippling sanctions from the West with the ruble trading around 100 to the dollar in recent days, the Kremlin has decided to demand countries pay in rubles rather than dollars for gas and oil.
Russian President Vladimir Putin said they would demand that countries it has labeled "hostile" to Russia, including the U.S., U.K., and European Union countries, to pay in rubles for Russian gas.
Putin also ordered the central bank and government to determine the scheme of ruble payments for Russian gas and ordered Gazprom to make corresponding changes to gas contracts.
The Russian leader also said they would continue supplying contracted volumes, will only change payment currency.
The ruble is going from strength to strength, rising over 5% at MICEX after indicative prices briefly jumped more than 8% twice.
According to the news service, Putin said it would make no sense to export goods to the U.S. or EU in dollars or euros.
The news comes days after a high-ranking Chinese government official blasted the West's sanctions regimen against Russia, saying the far-reaching punitive measures are "outrageous" and have only served to severely isolate Moscow.
"The sanctions against Russia are getting more and more outrageous," Vice Foreign Minister Le Yucheng told a security forum in Beijing, according to Reuters.
He described that the West depriving the people of their overseas assets was ultimately "for no reason."
"History has proven time and again that sanctions cannot solve problems," he said.
According to the FT, the imports mean Russian supplies account for about 15% of Europe's diesel consumption.
"The thing that everybody's concerned about will be diesel supplies," said Russell Hardy, chief of Switzerland-based oil trader Vitol.
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"Europe imports about half of its diesel from Russia and about half of its diesel from the Middle East."
Gas futures linked to TTF Europe's wholesale gas price have swung from about €70 a megawatt-hour before Russia's’sRussia’s's invasion of Ukraine to about €230 two weeks ago and then slid below €100 this week.
Before May 2021, European gas prices were below €20 a megawatt-hour.