October 4, 2022

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Putin's response to sanctions: Pay for gas only in rubles

Putin’s response to sanctions: Pay for gas only in rubles

The measure will apply to all countries that have imposed sanctions on Russia over the war in Ukraine. At the moment, gas shipments are still being compared to euros or dollars. This alone does not benefit Russia much, because because of the sanctions, it also became impossible to trade with foreign countries.

At the same time, the ruble fell sharply after the announcement of the first round of sanctions. By enforcing the necessity of settling gas supplies in rubles, Putin hopes to increase the price. Countries that do not currently have rubles will have to buy them to pay for gas.

rubles up, gas price too

Immediately after the news was announced Increase value From the ruble to the dollar. At the time this article was published, the price was 8 percent higher than it was at the start of the trading day. The price of gas has also risen, fearing that European countries will want to buy less Russian gas because of this move by the Russians.

Putin gave Russia’s central bank a week to come up with a plan on how to manage the currency change. The gas giant Gazprom also has to amend gas supply contracts for this purpose, for example, Reuters writes

The Russian President stressed that his country will abide by contracts for the supply of gas. He also has an interest in this, because the Russian treasury is largely filled with income from gas and oil sales.