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24 Nov, 2022 13:46

Russia warns it will withdraw oil supplies to ‘price cap’ countries

Nations that join the cartel of buyers won’t get any crude from Moscow, the Foreign Ministry insists
Russia warns it will withdraw oil supplies to ‘price cap’ countries

Moscow will embargo countries that support the Group of Seven (G7) nations' proposed price limit on its oil, Russian Foreign Ministry spokeswoman Maria Zakharova warned on Thursday. The statement was echoed by Kremlin Spokesman, Dmitry Peskov.

According to media reports, EU diplomats are optimistic they can reach a deal on a price ceiling for Russian oil exports despite sharp splits over the plan. Ambassadors are scheduled for more talks on Thursday evening to continue their discussions, Bloomberg sources say.

“We have repeatedly said that the introduction of the so-called price ceiling for Russian oil is an anti-market measure, it disrupts supply chains, and can significantly complicate the situation on global energy markets,” Zakharova told a briefing on Thursday, adding “The Russian Federation does not plan to supply oil to countries that will join the cartel of buyers.” 

The G7 is considering setting a limit on Russian sea-borne oil in the range of $65-70 per barrel. The move is expected to come into force on December 5, as part of sanctions introduced by the US, the European Union, and their allies.

If approved, it would bar Western corporations from providing insurance, re-insurance, brokering, and financial assistance to vessels loaded with Russian crude unless it was sold below the agreed price.

Zakharova noted that many oil-producing countries also oppose such a measure, pointing out: “They simply understand that today, by targeting Russia for purely economic reasons, … they [Western countries] can apply [such a measure] to any other country.” 

She stressed that “price dictates undermine the world trade system and create a dangerous precedent not only in the energy market but also for international trade in general.”

The measure is meant to prevent Russia from selling its oil for a higher price, as shipping and insurance giants dealing with trade in crude oil are located in Western countries. However, there is a risk of a severe global energy crisis if Russia cuts off supplies and it is not clear if the price cap will have an impact on Moscow’s revenues.

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