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5 Dec, 2022 13:13

Russia preparing response to oil price cap – Kremlin

Moscow describes the measure as an attempt to destabilize global energy markets
Russia preparing response to oil price cap – Kremlin

The Russian government is preparing an official response after the US, EU, and several other countries introduced a $60 price cap on the country’s oil exports. Moscow will not recognize any such price limit, Kremlin spokesperson Dmitry Peskov has said.

“The decision [on retaliatory measures] is still being prepared, but, of course, one thing is obvious here. We will not recognize any price caps,” Peskov told reporters during a press call on Monday.

He also acknowledged that global energy prices will see a dramatic change in light of the latest moves. “One thing is obvious and indisputable: the adoption of these decisions is a step towards destabilizing the world energy markets,” the spokesperson noted. 

Peskov’s comments come after the EU, G7 countries and Australia agreed last week to introduce a $60 per-barrel price cap on all purchases of Russian oil, which came into effect on December 5. Any transactions over this price limit will henceforth be prohibited from receiving brokerage, shipping, insurance, and other services. 

Moscow has repeatedly insisted that it will not accept or abide by any such price caps and will simply refuse to sell its oil to any countries that support it. 

“We believe that this tool is non-market, inefficient, grossly interferes with market instruments, contrary to all the rules, like those of the WTO, for example. We are not going to use price cap instruments. We are now working on mechanisms to prohibit the use of the cap,” Russian Deputy Prime Minister Alexander Novak stated on Sunday. He added that Moscow will only sell its oil to countries “that work with us on market terms,” even if it means reducing output. 

On Monday, EU restrictions on Russian crude imports took effect. The measure was agreed upon in June as part of a sixth sanctions package imposed on Moscow over its ongoing military campaign in Ukraine. All seaborne Russian oil imports to the bloc, with the exception of Bulgaria, will be banned effective December 5. On-land deliveries via the Druzhba pipelines to Hungary, Slovakia, and the Czech Republic will also be exempt.

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