Moscow has warned the European Union and the G7 countries of the consequences of imposing a ceiling on the price of Russian oil.
The head of the foreign affairs committee of the lower house of the Russian parliament, Leonid Slutsky, said the EU risks jeopardizing its energy security if it applies the cap, of 60 dollars a barrel, which is expected to come into force a few days.
The US says capping the price of Russian oil would limit Moscow’s revenue, which it uses for an “illegal war in Ukraine”.
US Treasury Secretary Janet Yellen said the price cap would immediately cut Russia’s most important source of revenue, but that Ukraine wants to bring it down to $30 a barrel.
The scheme aims to hit the Russian economy without disturbing global energy markets. Maritime analysts say Russia has acquired more than 100 vessels to try to transport growing quantities of crude oil to India and China.
Russia has said it will not supply its oil to countries that enforce the limit.
The price cap was introduced in September by the Group of Seven (US, Canada, Great Britain, France, Germany, Italy and Japan) together with the European Union in an attempt to hit Moscow’s ability to finance the war in Ukraine.
The G7, the European Union and Australia said in a joint statement that the decision was taken “to prevent Russia from benefiting from its war of aggression against Ukraine”.
The US Treasury secretary said the price cap would increase financial constraints on Russian President Vladimir Putin and “limit the revenue he uses to finance his brutal invasion,” avoiding global supply disruptions that could lead to an increase of fuel prices around the world.
“With the Russian economy already shrinking and the budget increasingly weak, the price cap will immediately compress Putin’s most important source of income,” he added in a statement.
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Oil and gas exports are one of the most important sources of income for Russia
Meanwhile, UK Finance Minister Jeremy Hunt said his country would not hesitate to support him and would continue to look for new ways to “strangle Putin’s funding flows”.
The price cap deal comes just days before a Europe-wide ban on Russian crude imported by sea will take effect on Dec. 5.
A cap on the price of Russian oil aims to complement this approach. Countries that have joined this policy, led by the G7, will only be able to buy Russian oil and petroleum products transported by sea and sold at a price in line with the declared ceiling.
Ukraine’s Western allies also intend to refuse insurance for tankers carrying Russian oil to countries that do not join the cap. This will make it difficult for Russia to sell oil above this price.
Leonid Slutsky told Russia’s Tass news agency that the European Union is threatening its energy security through this roof.
While Russia will certainly feel the impact of this measure, the blow will be partially cushioned by its move to sell its oil to other markets such as India and China, currently the two largest single buyers of Russian crude.
Before the war and in 2021, more than half of Russia’s oil exports went to Europe, according to the International Energy Union. Germany was the largest importer, followed by the Netherlands and Poland.
But since the outbreak of the war in Ukraine, the countries of the European Union have been actively trying to reduce their dependence. The US has already banned Russian crude, while Britain plans to phase it out by the end of this year.
