Russia, the world's second country in oil exports, will not sell oil subject to a Western price cap even if it has to cut production, President Vladimir Putin's closest energy adviser said today.
The Group of Seven (G7) and Australia agreed on Friday to a price cap for seaborne Russian crude at $60 a barrel after European Union member countries overcame resistance from Poland.
The move by the West is an attempt to punish Putin for the war in Ukraine.
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Russian Deputy Prime Minister Alexander Novak said today that the West's move is a blatant intervention that violates free trade rules and will destabilize global energy markets by causing a supply shortage.
"We are working on mechanisms that would prohibit the use of the tool of a price cap, regardless of what level it is set at, because this intervention could further destabilize the market," said Novak, who is the Russian government official in charge of the country's oil, gas, atomic energy and coal sectors.
"We will sell oil and oil products only to those countries that will work with us on market terms, even if we have to cut production a little," he added.
Novak said the Western cap could disrupt product markets and affect countries other than Russia.
[/P][BR][BR]It is not clear what, if any, immediate impact the Western cap will have on Russian oil flows because the Brent discount for Russian blends has widened considerably.
The Urals blend was trading around $61.3 a barrel - just over a dollar above the cap. Brent futures closed at $85.57 on Friday.
Selling oil and gas to Europe has been one of the main sources of foreign currency for Russia since Soviet geologists discovered oil and gas in Siberian swamps in the decades following World War II.
A source who asked not to be named because of the sensitivity of the situation told Reuters that the measure was prepared to prohibit Russian companies and traders from interacting with countries and companies driven by the cap.
In essence, such a measure would ban the export of oil and oil products to countries and companies that implement it.
After ordering the military operation in Ukraine on February 24, Putin says the United States has launched an economic war against Russia with the toughest sanctions in modern history, warning that the West will face an energy crisis.
In September, Putin warned the West that it cannot cut off energy supplies if price caps are imposed, saying Europe will "freeze" like a wolf's tail, as a well-known Russian tale goes.
Russia may have access to enough tankers to transport most of its oil beyond the reach of a new G7 price cap, industry players and a U.S. official told Reuters in October, underscoring the limits of the most ambitious plan to date to cut Moscow's wartime revenues.
Source: ertnews.gr
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