Putin reacts to Biden embargo, will limit raw materials trade

President Vladimir Putin has reacted to the US embargo on his country’s oil and natural gas by announcing that he will ban or limit Russia’s trade in raw materials by the end of this year.

The list of products and countries that will be affected will be drawn up within two days, according to the presidential decree released by the Kremlin. With that, Russia will neither sell nor buy basic products.

The action of US President Joe Biden, coordinated according to him with his Western allies, aims to punish Russia for the war it started by invading Ukraine on February 24. It adds to a series of tough economic sanctions.

The country’s main banks were disconnected from the international payments system, around 250 foreign companies left Russia and even the Central Bank’s access to US$640 billion of foreign exchange reserves was degraded.

The main Russian retaliation is expected to occur against Europe. On Monday, Deputy Prime Minister Alexander Novak said the Nord Stream 1 pipeline, which carries up to 55 billion cubic meters of the product every year from Russia to Germany, could be closed.

The US has criticized Europeans for their energy ties to Putin for years, and Nord Stream member companies have already been sanctioned by Washington.

The ban on oil exports should affect all countries on the list of nations considered hostile in the Ukrainian crisis by the Kremlin, such as the 27 members of the European Union, Japan and Australia.

Brazil is not on this list, and it may even make some gains in the crisis by exporting products that will be banned to other countries.

This will not offset the shocks, of course, of the US’s use of the so-called “atomic bomb of sanctions” to punish Putin for the war. Novak himself even predicted that a barrel of oil could end up at around US$ 300, compared to the already high US$ 130 this Tuesday.

With the largest reserves (24%) in the market, Moscow is the largest exporter of natural gas in the world. It has the eighth largest oil reserves (4.8%), but is the second largest exporter, after Saudi Arabia.

It is not by chance that the Brazilian government is already analyzing measures to try to hold down fuel prices.

Russian manufacturers seek solutions to maintain fertilizer export

Russian fertilizer manufacturers are looking for alternatives to keep exporting to countries like Brazil, despite the recommendation by Vladimir Putin’s government that work be suspended due to Western sanctions in retaliation for the war in Ukraine.

On Friday, the Ministry of Industry and Commerce in Moscow released the recommendation, citing that it would jeopardize “millions of people” and the world’s food security.

The aim was to put pressure on major shipping companies such as Maersk, which have stopped operating in Russian ports for fear of the binding effects of sanctions imposed by the United States, the European Union, Japan and other countries.

According to sheet heard in Moscow, businessmen in the sector understood that the export ban is just a recommendation at this point, so if there were alternatives for using ships from countries willing to face the risk of suffering sanctions, they will be used.

China and India, which refuse to condemn Russian action in Ukraine, are at the center of the talks. On the other hand, operations in ports, once the ships are available, tend towards normality, or almost.

Acron, leader in the Russian fertilizer market, which sells 32% of its production to Brazil and other countries in Latin America, operates two ports. One of them in Russia and two in Estonia, a NATO country (Western military alliance) that opposes the Kremlin, but so far has not stopped this business.

As there are about three months of fertilizer, nitrogen and phosphate stocks in Brazil, the expectation in the diplomatic environment is that the situation will be resolved before reaching a critical point. But political pressure on Bolsonaro continues, especially if there is a price increase due to the scarcity of inputs, which had already been rare due to the breakdown of logistics chains in the pandemic.