Russia issues oil supply warning to G7

Russia will embargo countries that support the Washington-proposed price cap on its oil, Deputy Prime Minister Alexander Novak said on Thursday.

“In my opinion, this is a complete absurdity… To those companies or countries that will impose restrictions, we will not supply our oil and oil products, because we are not going to work under non-market conditions,” he told reporters, commenting on a plan to limit prices on Russian oil currently being discussed by the Group of Seven (G7) countries.

Establishing a price ceiling on Russian oil is conceived as a means of slashing Moscow’s revenues from exporting the commodity while avoiding shutting the country’s crude out of the market. The proposal is due to be discussed at a meeting of G7 finance ministers on Friday.

According to Novak, such a plan would jeopardize the market mechanisms of “such an important industry as oil,” and could only lead to the destabilization of both the industry and the oil market.

“And European and American consumers will be the first to pay for it, while they are already paying high prices today because of the destabilizing measures [their governments] are implementing. In particular, the sanctions restrictions,” Novak said.

The official added that Russia is currently pumping as much oil as it has the ability to produce and sell at the moment, but if global market conditions stabilize and Russian producers could be confident in finding buyers, output could be raised. He noted that Russian oil producers are preparing for the upcoming EU oil embargo due to take effect in December, but they plan to maintain current levels of production regardless.

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