Kremlin rejects EU oil price cap: 'Europe will live without Russian oil'

Kremlin rejects EU oil price cap: ‘Europe will live without Russian oil’

The Kremlin on Saturday rejected a European Union plan to cap Russian oil prices at $60 a barrel as it seeks to starve Moscow’s war chest and warned that “Europe will live without Russian oil”.

“Moscow has already made it clear that it will NOT supply oil to countries that support anti-market price caps,” Mikhail Ulyanov, Russia’s permanent representative to international organizations in Vienna, said in a tweet on Saturday.

Friday’s EU deal will pave the way for further action by the G7 to target Russia as it continues its deadly war in Ukraine.


Russian oil field in the snow

A general view shows an oil processing plant at the Yarakta oilfield, owned by Irkutsk Oil Company (INK), in Irkutsk region, Russia, March 10, 2019. (REUTERS/Vasily Fedosenko/Reuters Photos)

World leaders have sought to balance a plan that would hit the Kremlin’s biggest revenue while allowing some Russian oil to stay on the market amid global fears about soaring energy costs and inflation.

The price cap effectively prevents all Western companies from insuring, financing or shipping Russian oil unless it is sold at less than $60 a barrel – a stipulation that will likely be felt in Russia given the price of more than 85 dollars a barrel indicated on Saturday under Brent, the international benchmark for crude oil.

Kremlin spokesman Dmitry Peskov echoed Ulyanov’s comments and told reporters on Saturday they were “assessing the situation” and noted that “some preparations” had already been made in case a cap on oil price would be established.

Peskov did not detail the precautionary measures taken by the Kremlin, but said: “We will inform you how the work will be organized after the assessment is completed,” TASS reported.

Although every EU member was expected to sign Friday’s deal, not all nations felt the ceiling hit Russia hard enough.

Kremlin spokesman Dmitry Peskov

MOSCOW, RUSSIA – DECEMBER 17: Kremlin Spokesman Dmitry Peskov is seen as a moderator at Russian President Vladimir Putin’s annual press conference in Moscow, Russia December 17, 2020. (Photo by Sefa Karacan/Anadolu Agency via Getty Images/Getty Images)


Some countries like Poland and the Baltic states have been pushing for a tougher cap of $30 a barrel and Estonian Prime Minister Kaja Kallas has pointed out that every dollar taken out of the cap means $2 billion less in Estonia’s war chest. Russia.

Despite some concerns that the cap could drive up prices by draining the oil market, US Treasury Secretary Janet Yellen argued that the new limits will help lower the price of oil globally.

“The price cap will encourage the flow of discounted Russian oil into global markets and is designed to help protect consumers and businesses from global supply disruptions,” she said, saying that it will most help low- and middle-income countries that have “borne the brunt”. of rising energy prices.

“Whether these countries buy energy inside or outside the cap, the cap will allow them to negotiate deeper discounts on Russian oil,” she added.

Russian President Vladimir Putin holds a meeting near Moscow

Russian President Vladimir Putin attends a meeting on economic issues via video conference at the Novo-Ogaryovo residence outside Moscow, Russia, Tuesday, June 7. (Mikhail Metzel, Sputnik, Kremlin Pool Photo via AP/Associated Press)


The Russian Embassy in the United States called his comments “arrogant” and alleged the move was “dangerous”, saying Russia would continue to find buyers for its oil.

“Measures like these will inevitably lead to growing uncertainty and impose higher costs on consumers of raw materials,” the embassy added.

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