Former Prime Minister Ranil Wickremesinghe says that the Russia-Ukraine crisis could have a serious repercussions on Sri Lanka as global oil prices surge in the backdrop of escalating tensions between the two nations.

"If Europe does not obtain LNG from Russia, they will have to obtain it from Qatar, which will in turn cause a shortage of LNG in Sri Lanka and the price of LNG will rise here as well. This will be a big hit to our economy," the former Prime Minister said speaking in Parliament today (22).

Russia was the largest supplier of natural gas and oil to the European Union last year, and these tensions are lending support to rising oil prices.

He also stressed the importance of Finance Minister Basil Rajapaksa making a statement in this regard before the debate in parliament commences tomorrow.

Commenting further on the fuel crisis, the former Prime Minister said:

The role of the Foreign Ministry will be handled by the Foreign Minister. It would be better if the Minister can report the economic impact to the House tomorrow morning. We would be able to have an informed debate then. I would also like to make a special request from the Leader of the House.

We bought 3 oil tankers at the old price and we need to figure out a way to pay for them somehow. The next stock will come at the new price. I don't' know how we could source the required funding but we must somehow find a way to settle this," he said.

 

 

When the former Prime Minister warned in Parliament that the escalating tensions between Russia-Ukraine could exacerbate the fuel crisis in Sri Lanka, international media reported that the price of a barrel of crude oil had risen by USD 2 this morning (22).

 

Russia-Ukraine crisis

 

On Monday evening (21), Russian President Vladimir Putin ordered forces into two breakaway regions of eastern Ukraine and said he would recognize the independence of Donetsk and Luhansk.

The U.S. and Europe have threatened to sanction Russia if it invades Ukraine, escalating fears of a possible supply disruption from one of the world’s top producers. Russia has repeatedly denied it is planning to invade Ukraine dispite amassing around 100,000 soldiers on Ukraine’s borders.

The White House said President Joe Biden would soon issue an executive order "that will prohibit new investment, trade, and financing by U.S. persons to, from, or in" the two Ukrainian regions under the control of Russian-backed separatists, Donetsk and Luhansk.

International benchmark Brent crude futures soared to a new seven-year high on Monday morning on the elevated geopolitical tensions. The contract was last seen trading at $94.33, down 0.1% for the session after earlier hitting a peak of $96.16.

U.S. West Texas Intermediate futures, meanwhile, stood at $93.20, roughly 0.1% higher.