The cap on Russian oil prices decided by Western countries will not affect Moscow’s offensive in Ukraine, the Kremlin assured on Monday and warned of a “destabilization” of the world energy market.
The Russian economy “has all the necessary capabilities” to finance the military offensive, Kremlin spokesman Dmitry Peskov told reporters. “Such measures will have no impact” on the intervention, he stressed.
“On the other hand, these measures will undoubtedly have an impact on the stability of the world energy market (…) It is a step towards their destabilization,” Mr. Peskov continued, adding that Moscow is “preparing” for “retaliatory measures.”
The European Union, G7 countries and Australia have agreed to cap the price of Russian oil, a measure set to take effect from Monday.
The stated goal of this new sanction is to dry up some of the colossal revenues Moscow derives from the sale of its hydrocarbons, thereby reducing its ability to fund the war effort in Ukraine.
Under the adopted mechanism, only Russian oil sold at a price of $60 or less per barrel can continue to be supplied. In addition, companies based in EU countries, the G7 and Australia will be prohibited from providing services that enable maritime transport (trade, freight, insurance, shipowning, etc.).
In fact, the G7 countries provide insurance services for 90% of the world’s cargo, and the EU is a major player in ocean freight transport – hence its ability to pass on this cap on oil shipped to the majority of Russia’s customers around the world, a credible deterrent .
The activation of a cap coincides with the coming into effect on Monday of an EU embargo on Russian oil transported by sea.
The Kremlin has already warned it will stop supplying oil to countries adopting the cap mechanism, a position Russian Deputy Energy Prime Minister Alexander Novak reiterated on Sunday.
Quoted by Russian news outlets, he even claimed that Russia was “working on mechanisms to ban the use of the capping tool, regardless of the height set.”
“Such interventions can only lead to further market destabilization and shortage of energy resources,” he said.
The price of a barrel of Ural crude oil is currently hovering around $65, just above the $60 ceiling.