Moscow will forbid domestic companies from selling Russian oil under any price cap, and is willing to dial down production to compensate for the lost exports, Russian Deputy Prime Minister Alexander Novak said Sunday, according to Russian news agency TASS.
The comments come one day before an EU embargo on seaborne Russian oil takes effect, and just as EU countries agreed on a price cap of $60 per barrel for sales of Russian oil to non-EU countries that EU-based companies, like shippers and insurers, would be allowed to participate in.
The price cap, backed by the G7, is an attempt to allow those shunned volumes of Russian oil to still be sold onto the global market, thus avoiding supply shortfalls and the ensuing skyrocketing prices.
But Novak said Russia “will only sell oil and oil products to those countries which will work with us on market conditions, even if we have to somewhat cut production,” according to the TASS report.
“We are not going to use instruments linked with the price cap. We are now looking at mechanisms to ban the use of the price cap instrument,” Novak added.
The deputy prime minister said that the price cap mechanism ran counter to World Trade Organization rules, would lead to reduced investment in energy, and could provoke global shortages and further market disruption.
He also warned that the price cap could in future “be applied not only to oil but to other products on the market, and not only to Russia but to other countries as well,” according to the report.