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Russia warns of consequences for price cap on its oil


The European Union’s plan to impose a price cap on Russian oil as part of fresh sanctions on the country for its war on Ukraine can have a ‘detrimental effect’ on global oil markets, a Russian minister warned on Wednesday.

“Such a tool disrupts all market mechanisms and can have a very detrimental effect on the global oil industry,” deputy prime minister Alexander Novak told Russian state television.

The minister also warned that Russian companies will not supply oil to the countries that try to introduce such a cap.

Last month, during its meeting, the G7 decided to put such a price cap on Russian oil to limit its oil revenues. The idea was dropped into cold storage after resistance from some members.

Moreover, in a move to raise the global crude oil prices, the OPEC countries decided on major cuts in oil production.

OPEC+ has agreed at a meeting in Vienna on cuts in production by 2 million barrels per day beginning in November.

The cut in production is a significant shift in the alliance’s production policy, which saw output cut by a record 10 million barrels per day in early 2020 as demand fell due to the Covid-19 pandemic, but gradually rebounded on those cuts and the production was increasing after that.

On the supply of gas to Europe, after recent leaks, Novak said Moscow was ready to supply gas to Europe quickly via an undamaged section of the Nord Stream 2 pipeline connecting Russia and Germany.

“If the necessary legal decisions are made by European colleagues regarding (Nord Stream 2’s) certification … I think Russia in a short period of time could provide appropriate supplies through this gas pipeline,” the Russian minister said.

Russia is also demanding to be involved in the investigations into last week’s explosions in the Nord Stream gas pipelines beneath the Baltic Sea.

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