InvestorQ : Why is Russia trying to push EU to a corner by insisting on Rouble payments for oil?
vidhya Laxmi made post

Why is Russia trying to push EU to a corner by insisting on Rouble payments for oil?

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sarah Leo answered.
1 month ago
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You would be aware that during the week, Russian central announced that the Rouble would be pegged to gold at 1 gram gold equal to Rouble 5,000. This is obviously some kind of Plan-B that Russia has activated. The reason Russia is now pushing for Rouble or gold payments for oil is to pressurize the EU, which substantially depends on Russia for its consistent supplies of oil and gas. Nearly 35% of EU oil and gas comes from Russia.

Russia realizes that the EU may not have much of an alternative to Russian oil and gas. Once the EU openly opposes the sanctions on Russia, the US and UK would automatically mellow down. Paying for Russian oil in Rouble or gold can be a sort of double whammy. The Russian dominance of EU oil needs is so huge that even the US will not be able to fill this gap.

Now, if the EU accepts Russian payment conditions, they will either end up boosting the demand and the value of the Rouble or they would end up transferring gold reserves to pay for oil imports. It is a Catch-22 situation for the EU and they will have to soon take a call on their top macro priorities. For now, Euro payments will continue but Russia is taking a price.

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