Russia to prohibit oil sales to countries introducing price cap

MOSCOW (AA) – Moscow will prohibit oil supplies to countries that will join the price cap on Russian oil, a government official has said.

“This decree (on retaliatory measures announced by President Vladimir Putin) implies a ban on the supply of oil and oil products to those countries and those legal entities that will require compliance in contracts with the price ceiling introduced by the European Union,” Deputy Prime Minister Alexander Novak said.

If Russia has to use this ban, it will also have to reduce oil production by 5% to 7%, or 500,000 to 700,000 barrels per day, Novak added.

The EU price cap on Russian oil in the amount of $60 per barrel came into force on December 5, along with a ban on the supply of Russian oil to EU countries by sea. In addition to the EU countries, the Group of Seven countries and Australia also joined the restrictions.

Novak said he expects that Moscow will continue to supply gas to the European market as there is demand there for the Russian fuel.

“Our European colleagues are constantly asking us to increase the volumes (pumped) via the infrastructure that is engaged today, this is the TurkStream, the Blue Stream, part of the Ukrainian infrastructure,” he added.

According to him, Gazprom is now actively working with Türkiye on the establishment of a gas hub, suggesting participation of other countries.

“Since Algeria, Qatar and Azerbaijan are currently supplying Europe in the southern direction, in principle, we are talking about creating a hub which not only Russian suppliers but also other exporters would participate in,” he said.

Novak expects that during 2023, decisions on the gas hub in Türkiye, where gas prices will be formed by market, will be worked out and made.