Oil price: Russia will suspend supplies if price caps are imposed

“We will not simply supply oil and petroleum products to such companies or countries that impose restrictions, because we will not operate uncompetitively,” Deputy Prime Minister Alexander Novak told reporters Thursday, according to the state news agency TASS.

The West has already done it Sanctions imposed on several Russian energy exportsBut Moscow continued to make billions of dollars a month by funneling oil to China and Asia. The United States, Europe, Canada, and Japan have been exploring what they can do for months. Finance ministers from the Group of Seven countries aim to reach an agreement on Friday.

The Biden administration has been lobbying governments to introduce a price cap because it would reduce the revenue President Vladimir Putin needs to fund his war in Ukraine, while theoretically allowing Russian barrels to continue flowing into global markets, avoiding a new inflationary supply shock.

“This is the most effective way, we believe, to hit Putin’s revenue hard, and it will not only lead to lower Putin’s oil revenues, but also lower global energy prices as well,” White House Press Secretary Karen-Jean-Pierre said. He said earlier this week.

But this procedure would be too complicated for the police. It remains to be seen how, when and how much the price of Russian oil can be capped. It will also need broad international support to be effective.

British Finance Minister Nadim al-Zahawi said on Thursday he hoped the G7 ministers would reach an agreement.

“It’s important because at the moment the British are under tremendous pressure,” he said during an event organized by the American Enterprise Institute, a Washington think tank.

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“There is real anxiety in families and in businesses because of the energy surge,” he added.

Since the beginning of July, oil prices have fallen about 18% in anticipation that the recession will cut demand, but they are still about 20% higher than they were one year ago.

TASS reported that Novak described the proposals to impose restrictions as “totally absurd” and said they could destroy the global oil market.

“Such attempts will only lead to destabilization of the oil industry and the oil market,” he said. “This will ruin the entire market,” he added.

Europe and the United States blocked most imports of Russian oil. But the plan to pile pain on Putin did not work.

Flows of crude oil and other oil products to the United States, the United Kingdom, the European Union, Japan and South Korea have fallen by about 2.2 million barrels per day since the start of the war in Ukraine, according to the International Energy Agency.

But two-thirds of this drop was transferred to other markets such as China and India, which helps fill Moscow’s coffers. The International Energy Agency said export earnings in July amounted to about $19 billion.
One option the G7 could adopt would be Prohibited companies It is based in the G7 countries from providing insurance or financing for oil shipments if buyers pay a price higher than a certain price.
Russia’s control of large swaths of the world’s energy supply remains key The challenge of six months since the invasion of Ukraine. This week Russia temporarily Stop Natural gas shipments to the region via a vital pipeline have cut off all supplies to French utilities, exacerbating problems that have pushed European inflation to a record 9%.

Russian energy giant Gazprom said the disruption to shipments through the Nord Stream 1 pipeline was due to a planned shutdown of a few days for maintenance work. It is supposed to open again on Saturday.

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– Anna Cuban and Manvina Suri Contribute to this report.

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