Russia doesn’t plan to supply crude or oil products to nations that implement a price cap, according to Deputy Prime Minister Alexander Novak.

Instead, Russia will redirect its oil supply to “market-oriented partners” or will reduce production, Novak said in a statement.

Novak’s reiteration of his country’s established position comes as the Group of Seven nations aims to announce this Wednesday at what level they will set a price cap on Russian crude oil. The cap, which is also backed by the European Union, would ban companies from providing services, including shipping and insurance, to Russian oil shipments anywhere in the world, unless it’s sold below the agreed threshold.

Turkey to Demand Oil Tankers Have Proof of Insurance, Adding Teeth to Russia Sanctions

Gas pipes at the Gazprom PJSC Chayandinskoye oil, gas and condensate field, in the Lensk district of the Sakha Republic, Russia, on Monday, Oct. 11, 2021. Photo credit: Andrey Rudakov/Bloomberg

The EU plans to ban Russian seaborne crude imports from Dec. 5 and purchases of the country’s oil products from Feb. 5. The US and the UK have said that their companies will be given a grace period to receive Russian cargoes until Jan. 19 to take into account of shipments that were loaded before the cap came into force.

The price cap will lead to a decline in investment “and a potential deficit in oil supply and any commodity where such a mechanism is applied,” Novak said.

Russia may struggle to find new markets for its oil after the European ban comes into force, according to the International Energy Agency. The nation may lose close to 2 million barrels a day of output by the end of March, compared with prewar levels, and pump an average of just 9.6 million barrels a day next year, the IEA said last week in its monthly report.

Top photograph: A worker moves drilling pipes at the Gazprom PJSC gas drilling rig in the Kovyktinskoye gas field, part of the Power of Siberia gas pipeline project, near Irkutsk, Russia, on Wednesday, April 7, 2021. Built by Russian energy giant Gazprom PJSC, the pipeline runs about 3,000 kilometers (1,864 miles) from the Chayandinskoye and Kovyktinskoye gas fields in the coldest part of Siberia to Blagoveshchensk, near the Chinese border. Photo credit: Andrey Rudakov/Bloomberg

Related:

Copyright 2022 Bloomberg.

Topics
Russia
Energy
Oil Gas

Interested in Energy?

Get automatic alerts for this topic.

Leave a Reply

Your email address will not be published. Required fields are marked *