…Calls oil cap ‘stupid.’
Reports last Friday quoted Russian president, Vladimir Putin suggesting that his country may be considering slashing its oil production in response to the Western price cap.
The Russian president also said Moscow wouldn’t be financially affected by the price cap, calling the mechanism “stupid.” Analysts warn that if Russia cuts output, it could spur volatility and send crude prices.
Russia’s slashing its oil output is in retaliation to the G7 and European Union’s price cap, according to President Vladimir Putin.
“We will think, maybe even about the possible, if necessary … reduction in production,” he said at a press event last Friday.
Also Read: A $65-$70 Oil Price Cap May Not Hurt Putin
He assured however that Russia’s finances wouldn’t be hit by the new measures and the West’s implementation of a price cap was needles, Reuters reported. He also warned energy prices would “skyrocket” for any countries that participated in the price cap.
Putin’s defiant remarks come after Russia’s central bank warned that the price cap and latest round of sanctions were “economic shocks” to the country.
On Monday, the EU’s embargo on seaborne Russian oil imports took effect, along with a $60-a-barrel price cap on Moscow’s crude that is meant to prevent a supply shock and limit Putin’s energy revenue.
Companies that abide by the price cap will be able to use European shipping and insurance services to send oil to Asia, where some countries have been snapping up Russian oil at hefty discounts since the invasion of Ukraine.
It has been said however that Russia reducing its oil production could rock energy markets, amid worsening the supply shortage and hiking crude prices even higher.
That scenario could cause oil prices to surge as high as $380 a barrel, JPMorgan previously predicted, though Russia is also reportedly considering a price floor.
Meanwhile, there have already been shipping disruptions as a result of the EU sanctions. Reports say oil tankers have piled up off the coast of Turkey as ships were asked for proof of insurance coverage.
By Bosco Anayo