Russia intends to implement a new mechanism by year end that could limit the sale of Russian crude oil at a price no lower than $60 per barrel, a policy level set by the G7, Australia, and the European Union. This plan was reported by the deputy prime minister, Alexander Novak, who noted that discussions are ongoing with industry players as authorities work through the details. He indicated that the decision is being debated publicly and with the involvement of key market participants, as reported by the official TASS agency.
Novak answered questions about the proposed mechanism by stating that the government is actively considering options and evaluating how this move would interact with current supply agreements and global demand. He stressed that the government is having constructive talks with companies to gauge the potential impact and to ensure any implemented framework is workable within the broader international market. The deputy prime minister underscored that the process is focused on achieving stable outcomes for both producers and buyers while safeguarding Russia’s strategic energy interests.
He also announced plans to maintain Russia’s oil production at the November level through December, despite the price cap and the embargo on seaborne Russian crude that took effect at the start of the week. Novak argued that world market demand and price dynamics will determine December sales, with a careful watching of how product flows and market conditions unfold. He pointed out that uncertainty remains regarding demand levels and general economic conditions, yet he remained confident in the country’s ability to manage supply to align with the evolving market landscape.
In late year production data, Novak noted a 2.2% year-to-date increase in Russian crude output from January to November 2022, reaching approximately 488 million tonnes. He acknowledged that there could be future adjustments if necessary, but suggested that large-scale reductions were not expected. His remarks emphasized the government’s intent to preserve market stability and sustain current export volumes while navigating the new pricing framework being contemplated for foreign buyers and trading partners.
Novak asserted that Russian oil remains in high demand on world markets and that the country holds a historically pivotal role as a major supplier of crude to global energy networks. He asserted that demand for Russian oil has historically been solid and is likely to persist, even as supply chains and logistics mechanisms experience changes due to new policy measures. He stated that while the market may adapt, there is no anticipated catastrophe for Russian energy sales in the near term.
The deputy prime minister also warned that imposing a maximum price on Russian oil could dampen global investment in the energy sector and could lead to tighter energy availability and higher prices in the future. Such a move, he argued, would have broad consequences that extend beyond one market and could affect energy security for several regions.
Sergei Riabkov, Deputy Foreign Minister of Russia, highlighted Russia’s energy interests and expressed confidence that the nation’s oil will continue to find buyers in spite of policy shifts. He told TASS that Russian authorities and relevant ministries are prepared for a range of market scenarios and are committed to protecting national interests in energy trade. He noted that Europe and other buyers may experience adjustments, but the core supplies would remain resilient in the face of external pressure and sanctions regimes. Riabkov warned that those pursuing anti-Russian narratives may eventually realize that volatility and price fluctuations are likely to accompany restrictive measures, and that such volatility could complicate energy procurement rather than stabilize it.