In response to Russia’s invasion of Ukraine, economic sanctions against Russia led by the U.S. and Europe continued, but as the ruble regained stability, the Russian central bank cut its key interest rate by 3 percentage points and increased the government’s preliminary funds by 273.4 billion rubles in about a month. As it has been confirmed that economic sanctions against Russia are useless without a ban on crude oil and natural gas, the European Union (EU) has decided to start discussing Russian oil at a foreign ministers’ meeting on the 11th, drawing attention to whether the ban will be declared.
According to Bloomberg News on the 10th, the Kremlin announced in a government decree that it will increase the government’s preliminary funds by 273.4 billion rubles to stabilize the economy facing external sanctions. The Russian government attributed the increase to sales of crude oil and natural gas in the first quarter. Currently, Russia exports about 8 percent of the world’s daily oil demand (about 100 million barrels).
In particular, the EU relies on Russia for 25 percent of total oil imports and 40 percent of natural gas imports. The EU imposed sanctions on Russia five times since the outbreak of the Ukraine crisis, but the value of the ruble, which plunged as it failed to touch crude oil and natural gas, the biggest source of income, also regained stability.
Accordingly, Russia’s central bank, which raised its key interest rate from 9.5 percent to 20 percent at the end of February, also said it would cut its key interest rate by 3 percentage points to 17 percent. Russia’s central bank said, “The pace of consumer price hikes has slowed significantly due to the fall in the ruble exchange rate (value increase).”
EU member states have begun discussions on Russian crude oil as it has been confirmed that economic sanctions will not work much without an energy embargo.
