Russian Deputy Prime Minister Alexander Novak believes that the ceiling on Russian oil prices is unacceptable regardless of the ceiling level. IV. On the sidelines of the Russia-China Energy Business Forum, he said that Russia has taken a firm stance on this issue.
“We have a rather difficult position here, I have already mentioned this more than once. Whatever the ceiling is, there will be prices. “Even if it’s high, it’s unacceptable in terms of contracting in principle,” Novak said.
In his speech, Novak expressed the opinion that introducing a ceiling price would create many risks.
“The latest restrictions have brought decisions on the adoption of price ceilings – all these actions involve huge risks for the functioning of the industry, not only in the oil industry, but causing shortages in energy resources and investments in the industry. This will affect any barter commodity in the future that Western countries will want to impose their own rules on,” he says.
Russian Deputy Prime Minister expressed the view that Western sanctions are thoughtless.
“This is, in principle, unacceptable from the point of view of concluding contracts. We will work according to the market”, warning Novak, adding that Russia will not soften its stance on this issue.
According to the cabinet member, the Russian side will stop oil supply even if exports are more profitable than the ceiling price.
Ceiling price controversy
G7 finance ministers had previously decided to impose a ceiling on Russian oil prices. For this, it is planned to form a “broad international coalition”. They want to forbid the countries of the Union to take any action to transport Russian oil by sea if its price is above the limit. The US believes this measure will help reduce Moscow’s revenue for military special operations in Ukraine, while simultaneously lowering energy prices around the world.
The restriction should come into effect on December 5 for petroleum products from February 5, 2023. This is provided by the eighth package of anti-Russian sanctions.
However, the EU has yet to agree on the level of restriction. The European Commission has proposed to set the price at $65-70 per barrel. Poland objected, with Warsaw demanding to lower the price to $30, arguing that the suggested maximum would be higher or close to current market prices.
He is also dissatisfied with the position of the EC and Baltic states. According to Politico, they don’t see the bar higher than $60 a barrel. Greece, Cyprus and Malta, which are dependent on tanker traffic, favor a higher ceiling or some form of compensation.
According to Josef Sikel, head of the Czech Ministry of Industry and Trade, who chairs the EU Council, negotiations will resume on 13 December.
TASS writes that currently Russia supplies Ural oil (a brand of Russian export oil blend) to several countries at a discount of about $20 to the price of Brent oil.
Kremlin’s reaction
Dmitry Peskov, a spokesman for Russian President Vladimir Putin, said Europeans were calling “inexplicable numbers”. “It feels like they’re just trying to make a decision for the sake of a decision – not for effect, but for the sake of a decision, to mark that the ceiling has been brought in,” the Kremlin spokesperson said.
“All this is subject to in-depth analysis,” he said. “For now, we’re acting from President Putin’s position that we’re not going to give oil and gas to states that will go up and join the ceiling,” Peskov said.
He added that Moscow, seeing the discussed price level, will analyze the situation “before forming a position.”