Russia on Saturday rejected the EU’s decision to impose a price cap on Russian oil for $60 per barrel and warned it will cut off any country that endorses the cap.
The EU’s ban on Russian oil will take effect on Monday, and the idea of the cap is so European insurance and other services can continue for Russian oil shipments if the crude is sold at the $60 limit. But Russia has warned since the plan was first discussed by the US and G7 that it wouldn’t comply.
“From this year, Europe will live without Russian oil,” Mikhail Ulyanov, Russia’s envoy in Vienna, wrote on Twitter. “Moscow has already made it clear that it will not supply oil to those countries that support anti-market price caps. Wait, very soon the EU will accuse Russia of using oil as a weapon.”
Kremlin spokesman Dmitry Peskov said Russia would not accept the cap and was assessing how exactly to respond. “We are assessing the situation. Certain preparations for such a cap were made. We won’t accept the price cap and we will inform you how the work will be organized once the assessment is over,” he said.
If Russia decides to retaliate by slashing oil production, it will send global prices skyrocketing. Russia on Sunday attended a meeting of OPEC+, where the oil-producing nations agreed to maintain current production levels, which they reduced by 2 million barrels per day in October.
Ukrainian President Volodymyr Zelensky doesn’t think the EU’s $60 price cap is low enough and slammed the move as “weak.” He said the EU’s determination was not “a serious decision” and that Russia would be “quite comfortable” at that level.
If the price cap plan backfires and leads to a major increase in global oil prices, it will also raise gas prices in the US, which have just returned to levels seen before Russia invaded Ukraine and the West began targeting Mosco with energy sanctions.