Update (1015ET): It did not take long for the Kremlin to respond to the G-7 plan to impose price-caps on Russian oil, with Deputy Prime Minister Alexander Novak warning that Moscow will ban exports of oil and other petroleum products to countries that impose a cap on the price of Russian crude. Novak made the remarks to reporters in Moscow on Sept. 1, according to Russian state media Tass, which came as Western powers were preparing to meet on Sept. 2 to agree on a Russian oil price cap.
“We will simply not supply oil and petroleum products to such companies or states that impose restrictions, as we will not work non-competitively,” Novak said, while denouncing the price cap as “completely absurd.”
“It will completely destroy the market,” Novak continued, arguing that interference in market mechanisms in a key commodity like oil would have a destabilizing impact on energy security in countries across the world.
US Treasury Secretary Janet Yellen took the opportunity of G-7 agreement to a nothingburger plan to take a victory lap:
"The price cap will advance our two key objectives; The first, of course, is reducing revenues that Putin needs to continue waging his war of aggression. And the second is maintaining a reliable supply of oil to the global market and putting downward pressure on the price of energy for people in the U.S., in the UK, and around the world."
But, echoing Novak’s remarks about a Russian oil export ban targeting countries that sign onto the cap, Kremlin spokesman Dmitry Peskov told reporters during a conference call on Sept. 2 that “companies that impose a price cap will not be among the recipients of Russian oil.”
As we detailed earlier, in what we are sure will be heralded as a critical step forward in the globally unified response to Putin's invasion of Ukraine, G-7 finance ministers have agreed to implement a price cap for global purchases of Russian oil - a measure the US hopes will ease energy market pressures and slash Moscow’s overall revenues.
“We confirm our joint political intention to finalize and implement a comprehensive prohibition of services which enable maritime transportation of Russian-origin crude oil and petroleum products globally,” G-7 finance ministers said in a joint statement.
“The provision of such services would only be allowed if the oil and petroleum products are purchased at or below a price (“the price cap”) determined by the broad coalition of countries adhering to and implementing the price cap.”
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