Russia Warns It Will Retaliate to G7 Oil Price Cap

If Moscow retaliates by cutting oil production, it would send global prices skyrocketing

Russia warned on Monday that it would retaliate against a plan to place a price cap on Russian oil that the G7 has agreed to implement.

“There can only be retaliatory measures,” Kremlin spokesman Dmitry Peskov told reporters, according to Reuters.

Treasury Secretary Janet Yellen and other finance ministers from the G7 announced their intention to implement a price cap on Russian oil on Friday. But the plan requires cooperation from Moscow, and Russian officials have made clear they would not comply.

“We will simply not supply oil and petroleum products to such companies or states that impose restrictions, as we will not work non-competitively,” Russian Deputy Prime Minister Alexander Novak said last week.

If Russia retaliates by cutting oil production, global prices could soar to astronomical levels, experts and analysts have said. Analysts at JPMorgan Chase said that if Russia reduces oil output by 3 million barrels per day, it would bring prices up to $190 per barrel. In the worst-case scenario, Russia would slash production by 5 million barrels, bringing prices up to $380 per barrel.

The details of how the G7 plans to impose the price cap aren’t clear. In a statement, the G7 ministers said that the price will be set by “a broad coalition” and that the cap will be implemented along with the next round of EU sanctions, which are set to take effect in December.

The EU sanctions will ban the import of Russian oil, with some exemptions, and will also prohibit issuing insurance for maritime shipments of Russian crude. Russia relies on Europe for shipping insurance, and while it could find alternatives, an initial shock could raise oil prices.

The idea of the plan would be that the EU ban on insurance would be reversed if the oil is being sold at a set price. But the plan also relies on the cooperation of Russian oil buyers, including China and India, who are already purchasing Russian crude at a discount and have little reason to risk their arrangement with Moscow.

Author: Dave DeCamp

Dave DeCamp is the news editor of, follow him on Twitter @decampdave.