Russia warned about possible reduction of oil production in case of a price ceiling

The introduction of a price ceiling on Russian oil could lead to a temporary reduction in Russian production, Novak warned. According to him, the sanctions planned by the West will cause difficulties with supplies and will create “a very bad precedent.

The introduction of a price ceiling on Russian oil could lead to a temporary reduction in its production in Russia, Deputy Prime Minister Alexander Novak told Bloomberg TV. In addition, the price cap could increase the cost of shipping crude and lead to delays in supply, he warned.

“Restricting prices sets a very bad precedent and will actually hit first and foremost those who do it [impose the restriction],” Novak said. – This mechanism is unacceptable to Russia.”

The deputy prime minister stressed that Russia may reduce oil production in 2023 to 490 million tons compared to 530 million tons in 2022, as the country “will not be able to redirect oil to other markets” if the restriction is introduced. “We will reduce production as much as necessary,” Novak said. – But we will not operate under the proposed mechanism.”

The deputy prime minister stressed that Russia could cut oil production in 2023 to 490 million tons, compared to 530 million tons in 2022, because the country “will not be able to redirect oil to other markets” if the restriction is imposed. “We will reduce production as much as necessary,” Novak said. – But we will not operate under the proposed mechanism.”

European Union countries agreed on a new package of sanctions against Russia on Oct. 5. In particular, the package includes limiting the cost of Russian oil in shipping to third countries – a measure that has been discussed since the U.S. authorities proposed it as an alternative to the embargo. According to calculations of the U.S. Treasury Department, the price ceiling would allow poor and developing countries to save $ 160 billion a year, but the department did not specify what exactly this ceiling should be. Bloomberg’s sources said in July that a price cap is expected at $40-60 per barrel.

In turn, the OPEC+ countries (the group includes Russia) said on October 5 that they had decided to reduce oil production by 2 million barrels per day. The reduction was opposed by the U.S. – officials in the country tried to diplomatically persuade allies in the Persian Gulf region to resist the production reduction, said knowledgeable sources Bloomberg.