“Russia intends to stop the supply of oil and oil products to countries that decide to limit the cost of oil from the Russian Federation,” Deputy Prime Minister Alexander Novak announced today, according to the Russian news agency Tass, a day before the meeting of the G7 on Friday to discuss imposing a ceiling on Russian oil.
According to the Russian news agency, the deputy prime minister told reporters that “in terms of price restrictions, if they impose price restrictions, we simply will not supply oil and oil products to such companies or states that impose restrictions, as we will not work in non-competitive conditions”.
Alexander Novak also criticized proposals to cap the price of Russian oil as “absolutely absurd” and added that the measure could completely destroy the global oil market.
“Interfering with the market mechanisms of such an important industry as the oil industry, which is the most important in terms of ensuring the energy security of the whole world, is an effort that will only destabilize the oil industry and the market,” he stressed.
He pointed out that those European and American consumers who are already paying high prices for energy now, will be asked to pay even higher prices. “This will completely destroy the market,” the Russian deputy prime minister stressed.
Yesterday, the White House announced that the finance ministers of the Group of Seven (G7), the most industrialized countries, will discuss the US administration’s proposal to impose a ceiling on the price of Russian oil at their meeting on Friday.
“This is the most effective way, we believe, to hit Putin’s revenues hard, and this will result not only in reducing Putin’s oil revenues, but also in global energy prices,” the White House spokeswoman said. House of Karin Jean-Pierre in a press release.
G7 leaders will discuss how to create such a price cap and have considered other alternatives, including blocking Russian oil shipments. The G7 consists of Britain, Canada, France, Germany, Italy, Japan and the United States.
Many countries have imposed sanctions on Russia after its invasion of Ukraine, which Moscow calls a “special military operation”, but key oil consumers China and India have increased imports of discounted Russian barrels to record levels.
Despite Russia’s oil exports at their lowest levels since last August, its export earnings in June rose by $700 million a month on higher prices, 40 percent above last year’s average, the International Energy Agency.
Western leaders have proposed tackling this through an oil price cap to limit how much refiners and traders can pay for Russian crude – a move Moscow says it will not abide by and can prevent by sending oil to states that do not respect the price ceiling.
Some oil traders and analysts have expressed doubts that a price cap would work as Russia has found ways to move its oil to Asia without using Western ship insurance. Moscow could also halt oil exports altogether, driving energy prices up further.