Deputy Prime Minister of the Russian Federation Alexander Novak told Channel One that if the price of Russian oil turns out to be lower than the cost of extracting fuel, Russia will not supply energy to world markets.
“If they talk about these prices [страны G7]It will be lower than the cost of oil production, of course, Russia will not be able to supply this oil to world markets, which means that we will not work at our expense.
In June, it became known that the G7 countries were discussing new sanctions against Russia. This time, the Western allies decided to put a “ceiling” on Russian oil prices. A ban on oil supply by sea is also discussed if its cost exceeds the ceiling “agreed upon by international partners”.
At the same time, the G7 plans to take these measures at a global level, and there is little agreement between the EU and the US for this. Therefore, negotiations with other countries are currently underway.
US Treasury Secretary Janet Yellen held “encouraging” talks with her Indian counterpart on July 18, Reuters reported. According to the agency, India disagreed, but allegedly did not express “disliking the idea”.
Shortly before that, Yellen had “productive conversations” with colleagues from several countries on the sidelines of the G20 summit in Indonesia. The subject of their discussion was the same – setting a ceiling price for Russian oil.
“As for the cost of energy resources, the efficient duo [переговоры] “With more than half a dozen colleagues we discussed the benefits of oil price restrictions,” he said.
He believes that price ceilings are “one of the most powerful ways to tackle the problem of high prices facing people in America and around the world.” He believes that such a measure will reduce not only Russia’s income, but also energy costs.
According to the U.S. Treasury Department, Yellen met in Indonesia with colleagues from Saudi Arabia, Australia, South Africa, Singapore and Turkey.
How will the oil price ceiling work?
According to Yellen, Western countries want to set maximum fuel prices at a level where Russia can easily continue to extract and sell its energy resources.
According to the head of the US Treasury, this mechanism is necessary because otherwise “Russia will be completely cut off from the provision of these extremely important services, which could lead to a significant clogging of Russian oil” and a rise in world prices. The West will not discuss this limitation with Russian officials.
Western countries came to this decision after the European Union placed an embargo on the purchase of Russian pipeline oil, which caused fuel prices to skyrocket. Russia diverted its resources to other markets, primarily India and China. Even Russia was black: Moscow sold smaller volumes of oil at a discount.
Meanwhile, a crisis came to the EU and the USA. There was also a secondary effect in the West in the form of inflation.
What might the “ceiling” of prices lead to?
In Russia, the restriction of oil prices is considered another attempt to interfere with market mechanisms. According to Novak, this could lead to market instability, scarcity of energy resources and higher prices.
The same view is shared by analysts at JPMorgan. Previously, citing experts from the organization, Bloomberg said that in response to price restrictions, Russia could reduce its raw material production by 5 million barrels per day without causing significant harm to itself. And that, in turn, will lead to “stratospheric” $ 380 per barrel. “The intensity of the world oil market plays next to Russia,” bank analysts said. Currently, the price of oil per barrel is at the level of 110 dollars.