Putin acknowledges the impact of Western economic sanctions on Russia

Russian President Vladimir Putin acknowledged Thursday that Western economic sanctions have hampered Russia's energy industry, which is the country's economic engine, according to a report in the Wall Street Journal.

Putin made it clear during an official meeting that the Russian energy industry will need to redirect oil and gas sales from markets in Europe to Asia.

"The most acute problem is the disruption of export delivery logistics, and banks from unfriendly countries" including in the European Union "are delaying the transfer of payments," he said, adding, "European countries constantly talk about refusing Russian supplies, which further destabilizes market and price inflation.

The Russian president warned that "attempts by Western countries to put pressure on suppliers and replace Russian energy resources with alternative supplies will inevitably affect the entire global economy."

He stressed the importance of "replacing equipment affected by Western sanctions to maintain oil fields and develop new ones."

Putin reiterated his demand that European customers pay Russia for gas exports in Russian rubles, which was rejected by most EU governments, noting that Russia "intends to radically increase the share of settlements in national currencies in the foreign trade system."

The report notes that although oil and gas shipments from Russia have not been banned, European sanctions have banned the financing and technology needed to develop this sector, adding that the largest customers of the Russian energy sector are concentrated in Europe.

Thursday, Brent crude prices reached $108 a barrel, while Russian crude is trading at a discount of more than $30 a barrel against Brent.

Analysts of the newspaper are likely to return to Russian oil production in the coming months, as production has decreased during the current period due to the difficulties of selling through the Russian supply chain.

Economists expect a "stagnation accompanied by a rise in unemployment and inflation," especially in light of the challenges facing the Russian energy industry, and the country's isolation from much of the Western financial infrastructure, according to the report.

The oil and gas industry is the backbone of the Russian economy, with sales from this sector accounting for 45 percent of Russia's federal budget in 2021.

Russia faces internal problems related to the energy sector, as the infrastructure in more than 150,000 oil fields, many of which are old and need investments and equipment for maintenance, according to the newspaper quoted analysts.

Global trade faltered in March as accelerating inflation, the war in Ukraine and lockdowns imposed by the COVID-19 pandemic in China added to signs that the global economy is entering a difficult phase as policymakers struggle to maintain growth.

The European Union, the United States and Japan all announced a ban on Russian coal.

The President of the European Commission, Ursula von der Leyen, revealed her intention to present a plan for the EU to get rid of Russia's fossil energy sources by 2027.

The possibility of banning Russian gas is hotly debated among EU member states, as Germany and others oppose an immediate halt to these imports, on which it largely depends, according to Agence France-Presse.

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