Russia turns down oil price cap, to issue a formal response
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Russia has said it is unwilling to accept a price cap on its oil, with the Kremlin saying it will issue a formal response. This comes as Western countries look to limit Russia’s source of funds in the ongoing war against Ukraine.
Russia will not accept an oil price cap
According to a spokesman of the Kremlin, Dmitry Peskov, Russia had already prepared itself for the announcement on price caps made by the G7 nations, the European Union, and Australia.
According to a local publication, Peskov was firm in rejecting this announcement saying, “we will not accept this cap.” The spokesperson said that Russia would analyze the agreement made by the Western nations and issue a formal response.
Russia has also said it would no longer supply oil to the countries implementing the oil cap. According to social media posts, this stance was supported by the Moscow ambassador to international organizations in Vienna, Mikhail Ulyanov.
Ulyanov said that Europe would start living without Russian oil if they implemented the cap in question. This cap will allow countries not in the EU to continue importing Russian crude oil. However, it will prevent shipping and insurance companies from handling cargo containing Russian crude oil globally unless it is sold for $60.
This move could complicate the global sale of Russian oil if the country rejects the price cap. The countries not part of the agreement will also be affected, as importing Russian oil without the price cap will become challenging. Russian oil is trading at around $67 per barrel.
Price cap will benefit low and medium-income countries
The US Treasury Secretary, Janet Yellen, has commented on this initiative. She said that the price cap would benefit the economies of low and medium-term countries that have borne the effects of the rising global energy and food prices.
She further noted that the ongoing war in Ukraine had affected Russia’s economy, and the country’s budget was stretched thin. Therefore, having this price cap would take away one of Russia’s most important sources of revenue, possibly resulting at the end of the ongoing war.
The Russian embassy in the United States has also rejected the move. The institution said the move was “dangerous,” adding that Russia would continue sourcing new buyers for its oil.
The embassy further said that the agreement made by the Western powers was “dangerous and illegitimate,” adding that Moscow was confident that its crude oil would continue to be in demand, and the price cap would not affect the supply.