The European Union’s possible reduction of the price cap for Russian oil will not have a negative impact on the country’s crude exports, Deputy Prime Minister Alexander Novak said, as per Interfax.”I can say that all impositions of price ceilings that have been in effect for more than two years already are not having any influence on ensuring shipments of Russian export resources. Yes, this imposes certain changes to logistics infrastructure and so on, but in general our production and export volumes have not changed,” Novak said in an interview with Business FM.

“I can go by the fact that when a ceiling of $60[per barrel was imposed it did not have an impact. This means that you can even set zero, it still won’t have an impact,” Novak said.

He said the growth of Russian oil exports to friendly jurisdictions was driven by the sanctions imposed on Russia by the EU, United States and other countries, not the price ceiling.”I think that all these settings of price ceilings are just a desire to spite us. And it seems to me that it’s not even beneficial for the EU to lower the price nominally to $45. Sanctions harm the global energy balance, long-term investments that need to be made to supply the growing consumption of energy in the world,” Novak said, adding that the market would be unbalanced without Russian oil.

G7 and EU countries (the price cap coalition) have banned imports of Russian crude oil and oil products, but allowed shipowners from their countries to transport them and provide brokerage and other services if the commodity is sold at a price that his no higher than the cap set by the coalition. The objective of the embargo and price cap is to limit Russian budget revenues from the sale of energy resources while maintaining a sufficient supply of crude and oil products on the world market.The price cap for Russian oil is now $60 per barrel. However, the International Energy Agency said in its May report that charter costs for Russian exports have decreased since the price of oil has fallen below $60 per barrel for the main flows of Russian oil, leading exporters to charter regular vessels and use delivery and insurance services that comply with sanctions. This has pushed the EU to discuss changing the price cap.European Commission President Ursula von der Leyen confirmed on June 10 that the EC’s proposal calls for the reduction of the price cap for Russian oil to $45 per barrel as part of the 18th package of sanctions against the country. However, EC spokesperson Arianna Podesta said on Wednesday that the escalation of the conflict in the Middle East, which has led to a spike in oil prices, has made the plans to lower the price cap less urgent.
Source: Reuters