Russia Will Not Export Oil Subject to Western Cap, Says Putin Energy Point Man

SEATTLE (Oil Monster): Russia, the world’s second-largest oil exporter, will not sell oil that is subject to a Western price cap even if it has to cut production, President Vladimir Putin’s point man on energy said.

The Group of Seven and Australia on Friday agreed to a $60 per barrel price cap on Russian seaborne crude oil after European Union members overcame resistance from Poland.

The move by the West to prohibit the shipping, insurance and reinsurance companies from handling cargoes of Russian crude above the cap, is an attempt to punish Putin for the Ukraine conflict.

Russian Deputy Prime Minister Alexander Novak said on Sunday the move by the West was a gross interference which contradicted the rules of free trade and would destabilise global energy markets by triggering a shortage of supply.

“We are working on mechanisms to prohibit the use of a price cap instrument, regardless of what level is set, because such interference could further destabilise the market,” said Novak, who is the Russian government official in charge of the country’s oil, gas, atomic energy and coal.

“We will sell oil and petroleum products only to those countries that will work with us under market conditions, even if we have to reduce production a little,” he added.

Novak said the Western cap could trigger trouble in the products markets and could affect other countries beside Russia.

It is unclear what, if any, immediate impact the Western cap will have on Russian oil flows because the discounted price to Brent for Russian blends has widened so significantly.

Courtesy: www.indianexpress.com