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Russia says oil price cap won“t stop it from financing Ukraine war effort

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Crude oil tankers, including Troitsky Bridge vessel, lie at anchor in Nakhodka Bay near the port city of Nakhodka, Russia, December 4, 2022. REUTERS/Tatiana Meel

Russia said on Monday that a Western price cap on its oil would destabilise global energy markets but would not affect its ability to sustain what it calls its “special military operation” in Ukraine.

Kremlin spokesman Dmitry Peskov said Russia was preparing its response to Friday’s move by the G7 and allies, which was aimed at squeezing Moscow’s energy revenues and reducing its ability to wage war.

“Russia and the Russian economy have the required capacity to fully meet the needs and requirements of the special military operation,” Peskov told reporters when asked if the move would undermine Moscow’s military effort.

He said it was “obvious and indisputable that the adoption of these decisions is a step towards destabilising world energy markets”.

The move by the G7, European Union and Australia will allow other countries to continue importing seaborne Russian oil but it will prohibit shipping, insurance and re-insurance companies from handling cargoes of Russian crude unless it is sold for less than $60 a barrel.

The EU itself is banning seaborne imports of Russian crude from Monday. Global benchmark Brent crude was up 1.95% at $87.24 a barrel by 1052 GMT.

Several Russian officials have previously said Moscow will not sell oil to countries that abide by the cap.

Former Russian president Dmitry Medvedev, now deputy chairman of Putin’s Security Council, wrote on Telegram that the squeeze on Russian oil would lead to an “unimaginable” jump in world prices.

He suggested that the West would freeze this winter as a consequence of entering “an unequal battle with the Russian bear and General Frost.”

“What is good for a Russian is death for a German,” he added, referring to the winter cold. “One thing is clear – nothing good will come of it for consumers, that’s for sure. So let them stock up on schnapps, quilts and water heaters.”

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