Russian President Vladimir Putin is moving to impose his own sanctions on the west, ordering his government to come up with a list of commodities and other products and western countries to be hit with restrictions.
Putin’s move followed the decision by the Biden administration to ban imports of Russian oil, the European union said it would cut imports of Russian gas by two thirds and the UK government said it would end Russian oil imports by the end of this year and would also look at cutting imports of gas.
The Putin counter sanctions emerged in a decree issued Tuesday evening in Moscow.
The actual commodities to be banned from export will be determined by the Russian cabinet, the decree said (according to Reuters and the Wall Street Journal). Mr. Putin gave them two days to come up with a list of commodities and of countries subject to the ban.
Russia is the third-largest oil producer in the world after the US and Saudi Arabia and the biggest exporter of natural gas.
Oil prices rose following Mr. Putin’s decree. Brent-crude prices, the international benchmark, extended earlier gains to trade 5.9% higher at $US130.50 a barrel, easing to around $US124 a barrel in early Asian dealings Wednesday. They remained below the high of about $US139 a barrel hit on Monday.
Russia is also a major supplier of grains and metals such as aluminium, nickel and palladium, which it accounts for 40% of the world’s production.
The decree was a follow-up to earlier measures taken by the Kremlin in retaliation for Western sanctions. It described the goal of the commodity-export ban as “ensuring the security of the Russian Federation and the uninterrupted functioning of industry.” The ban will be in effect until Dec. 31, according to the decree.
What commodity analysts can’t understand is how Russia will avoid shooting itself in the foot by banning exports of key products. The only option seems to be that Russia will continue to produce these products and try and engage in sanction busting shipments through central Asia and China.
Russia accounts for around 10% of global nickel production of around 2.5 million tonnes. Prices have already soared to the point where the London metal Exchange suspended nickel trading Tuesday after prices reached a record $US101,000 a tonne before easing back to around $US71,000. That was after Monday’s 61% surge.
Palladium is a key metal for renewables, but there are other smaller sources in South Africa and larger sources to come from Australia – Chalice Mining for example’s Gonneville prospect in WA and prospects around Broken Hill in NSW. These are several years off.
