Russian officials have said the country won’t immediately demand that buyers pay for its natural gas exports in rubles after President Vladimir Putin said earlier that “unfriendly” countries must do so.
Putin issued an order March 23 for Russian gas to be purchased in rubles instead of dollars or euros, directing the Russian central bank, the government, and Russian energy giant Gazprom to present proposals by March 31.
The move could serve to strengthen the value of the Russian currency, which has weakened in recent weeks amid Western sanctions in response to its invasion of neighboring Ukraine.
Russia supplies about 40 percent of the European Union’s natural gas supply, and both the EU and the United Kingdom have increased their reliance on Russian gas supplies over the past decade.
But when asked whether the payments should be in rubles starting from March 31, Kremlin spokesperson Dmitry Peskov said “absolutely no.”
“As we discussed before, payments and delivery is a time consuming process … This does not mean that a [sic] tomorrow’s delivery should be paid (in rubles). From a technological point of view, this is a more prolonged process,” Peskov said.
The list of countries “unfriendly” to Russia includes the United States and Canada, member states of the EU, the UK, Australia, New Zealand, Japan, Norway, Singapore, South Korea, Ukraine, and more.
Fears are now growing as to how exactly the move will impact those nations—many of which are already in short supply of gas—as they head toward winter in 2022 and in subsequent winters.
There are also questions regarding the legality of the move, with many Western leaders suggesting that Putin’s demand is a violation of the country’s existing trade agreements, which stipulate payment for natural gas exports in dollars and euros.
Despite these concerns, German energy minister Robert Habeck announced that the leading industrial nations that form the Group of Seven (G-7) had agreed to reject categorically Putin’s demand for gas payments in rubles, telling reporters that “all G-7 ministers agreed completely that this (would be) a one-sided and clear breach of the existing contracts.”
Habeck continued, “payment in the ruble is not acceptable and we will urge the companies affected not to follow Putin’s demand.”
Following Putin’s announcement, the Russian ruble—which has lost more than 50 percent of its value relative to the U.S. dollar since the start of 2022—regained some of its value against the dollar and others.
However, experts say currency pressures will continue as Western nations levy more sanctions against Moscow amid the ongoing conflict in Ukraine.
In an interview with Fortune, Ipek Ozkardeskaya, a senior analyst at Swiss online bank Swissquote, said he believes that “what we are seeing now with the reappreciation of the ruble is just a correction.”
He continued, “I don’t see the medium to long-term valuation being positive if the situation in Ukraine keeps escalating. Russia has already lost a lot in this conflict. They will be increasingly feeling the pinch of these sanctions.”
Reuters contributed to this report.