Sanctions imposed on Russia present a ‘huge risk,’ energy minister says

Key Points
  • Russia's energy minister has said sanctions on his country are obviously being used to gain economic advantage.
  • Alexander Novak told CNBC Friday that the sanctions are being used with increasing frequency.
  • OPEC, Russia and several other allied producers have spearheaded an ongoing effort to try to clear a global supply overhang and prop up prices.
Foreign investors stand to lose most from sanctions: Russian energy minister

The Russian energy minister said that sanctions imposed on his country are economic competition measures that impact negatively on its relations with certain countries.

Prices of oil and metals have leaped following U.S. sanctions on Russia, which has raised investor fears over the availability of supply.

Alexander Novak, the Russian energy minister, told CNBC's Steve Sedgwick in Jeddah Friday that every fresh sanction had an adverse effect.

"We can see non-economic measures of competition. Unfortunately, such tools are being used with an increased frequency and they represent a huge risk," he said on the sidelines of the OPEC and non-OPEC members meeting in Jeddah.

Oil prices have been rising over the past few months and on Thursday hit their highest levels since November 2014.

Russia's Energy Minister Alexander Novak (L) and Saudi Arabia's Energy Minister Khalid al-Falih.
Heinz-Peter Bader | Reuters

At the last check Friday, U.S. West Texas Intermediate crude oil prices were at $67.73 a barrel, while international benchmark Brent crude sat at $73.15.

Novak said that rising prices because of sanctions would not hurt Russia, but internationally consumers and investors would bear the brunt.

"Energy consumption will continue to grow and these artificial barriers will hurt consumers. They will experience energy deficits and price increases," he said.

"The Russian economy does not suffer too many problems. We have learned how to adapt to this non-market measure. It is the international investors who suffer most."

President Donald Trump has blamed the rise in crude prices on the OPEC oil producers' group, calling prices "artificially very high" on Friday.

In his tweet, Trump said: "Looks like OPEC is at it again. With record amounts of oil all over the place, including the fully loaded ships at sea, oil prices are artificially very high! No good and will not be accepted!"

Tweet 1

Curbs on supply from OPEC and non-OPEC members began at the start of 2017 and are currently set to expire at the end of 2018.