A senior official declares that crude production will cease if the Western price restriction becomes it unprofitable.
Deputy Prime Minister Alexander Novak warned Russia’s Channel One on Thursday that if the West’s price ceiling makes it unprofitable to maintain producing, Russia will cease exporting oil globally.
“If these prices which they are talking about are lower than the costs for oil production… naturally, Russia will not ensure the supply of this oil to the world markets, which means that we simply will not work at a negative profit,” he explained, as cited by TASS.
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The G7 nations decided to limit the price of Russian oil at the end of June. Washington had first proposed this notion as a way to reduce Russia’s profits from energy exports. Bloomberg reports that supporters of the proposal are debating the prospect of lowering the price paid for Russian exports by interfering with the insurance and shipping of the nation’s oil. Only raw materials and oil products whose worth does not exceed the price ceiling would be permitted to be insured and transported, according to the idea.
Fumio Kishida, the prime minister of Japan, recently declared that the price cap’s top limit will be set at roughly half the current market price of Russian oil. A barrel of Urals typically cost roughly $87.25 in June. However, there are still open questions and the price ceiling hasn’t been decided.
Russia thinks that the price cap would raise oil prices even further. Western nations “are treading on the same rake,” as in the case of giving up Russian gas, according to President Vladimir Putin.
“The result will be the same – oil prices will skyrocket,” he said.
If the West follows through with the plan, the price of oil may possibly approach $300-400 per barrel, according to Dmitry Medvedev, the deputy chairman of the Security Council.
He forewarned that oil will be substantially less available and more expensive.