Russia has said that it will increase its shipments of oil to the continent of Asia after the G7 finance ministers announced a price cap on Russian oil and fuels, to enter into effect this December and early in February next year respectively.
Speaking on the sidelines of the Eastern Economic Forum in Russia’s Far East, Russia’s energy minister, Nikolay Shulginov, said what the G7 has done will backfire on their countries.
“Any actions to impose a price cap will lead to deficit on (initiating countries’) own markets and will increase price volatility,” Reuters quoted him yesterday.
Last Friday, the G7 foreign ministers formed a buyer cartel over Russian oil and gas with a cap price. Russia has since described the price cap as ridiculous, stressing that it would chose who to sell to, whereas it would not sell to ‘unfriendly’ countries.
Also Read: G7 Agrees On Oil Price Cap Against Russia
A day later Kremlin spokesman Dmitry Peskov echoed the sentiment, telling media that “We simply will not cooperate with them on non-market principles. Energy markets are at fever pitch. This is mainly in Europe, where anti-Russian measures have led to a situation where Europe is buying liquefied natural gas (LNG) from the United States for a lot of money – unjustified money,” he said
He accused U.S. companies of getting richer and European taxpayers getting poorer from the situation. Peskov also said there would be retaliatory steps but provided no details of their nature.
Redirecting crude oil cargos from Europe to Asia is widely seen as Russia’s one good move in this situation. It has already been doing it.
It will be recalled that the U.S. and the UK banned imports of Russian crude and fuels soon after Russia’s invasion of Ukraine in February. Canada was never an importer of Russian oil.
The European members of the G7 are part have signaled the commencement of an embargo on Russian oil and fuels later this year. Japan said it will continue to receive Russian oil from Sakhalin-2 without capping its price because it is critical for its energy supply.
Analysts have said that the gas crises in Europe will create windfall for many refiners and traders, in addition to the promotion of corruption for smart dealers who would capitalize on the price deferential.