Kremlin: G7's Russia Oil Price Cap Will Destabilize Market, But Moscow Has 'Alternative Scenarios'

Earlier on Friday, the Russian Embassy in the US warned of far-reaching consequences from “manifestly harmful ideas of introducing a ‘price cap’ on Russian oil which are actively promoted” by Washington.

Kremlin spokesman Dmitry Peskov has stated that the G7's plans for a price cap on Russian oil “will substantially destabilize” oil markets.

He told reporters on Friday that the West’s “anti-Russian measures had led to a very deep [energy] crisis” in Europe.

Those measures have led to a situation where Europeans buy liquefied natural gas from the US for huge amount of money, Peskov said, adding that “American companies are getting richer, while European taxpayers are getting poorer.”

‘So let's see how oil case processes will develop if such absurd decisions are made,” he noted, referring to the G7’s push for imposing a price cap on Russian oil.

Peskov also said that Russian oil, which will not be delivered to Europe, will be supplied to those countries that respect market conditions via alternative routes.

The Kremlin spokesman referred to a recent remark by Russian Deputy Prime Minister Alexander Novak that Moscow will not deliver oil or oil products to countries that support the idea of putting a limit on the price of Russian oil.

"[Oil will be delivered] in alternative directions, to those countries that operate according to market conditions," Peskov told journalists when asked where the oil will be redirected.

The remarks come after the Russian Embassy in the US warned that such a move “only threatens to further collapse the oil market, which is already struggling to recover after the COVID-19 pandemic.”

“Moreover, it is under relentless pressure from lobbyists promoting a turbocharged ‘green’ transition,” the embassy stated, stressing that Moscow “will not sell oil at a loss” and it is “not going to work on non-market conditions.”

The Financial Times has, meanwhile, quoted unnamed sources as saying that the price cap “would be implemented at the same time as the EU’s own embargoes on Russian oil imports”, a measure that purportedly “would take effect on December 5 for crude and February 5 for refined products”.

In late August, US Treasury Secretary Janet Yellen expressed optimism about the progress G7 countries had made on imposing a price cap on Russian oil.

The remarks came after G7 members issued a communique during their summit in June that the oil price cap scheme could be implemented through options such as allowing Russian seaborne crude oil and petroleum products to be shipped worldwide, but only if they are purchased at or below an agreed-upon price threshold.

In March, US President Joe Biden announced a ban on Russian oil, natural gas and coal imports, and the UK followed suit, declaring a halt of imports of Russian oil and petroleum products starting in early 2023.

The European Union has said it will block most Russian oil imports by the end of 2022. The decisions were part of “severe” sanctions that were imposed on Russia by the US and its allies shortly after the beginning of Moscow’s ongoing special operation to demilitarize and de-Nazify Ukraine on February 24.