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Russia will increase its shipments of oil to Asia after the G7 finance ministers announced a price cap on Russian oil and fuels, to enter into effect from December 5 and February 5, 2023, respectively.
"Any actions to impose a price cap will lead to deficit on (initiating countries') own markets and will increase price volatility," said Russia’s Energy Minister Nikolay Shulginov on the sidelines of the Eastern Economic Forum in Russia’s Far East, as quoted by Reuters.
The G7 foreign ministers announced the price caps on Friday. Earlier that week, Russian Deputy Prime Minister Alexander Novak said that the price cap was ridiculous and that in response Russia would simply stop selling oil to countries enforcing it.
A day later Kremlin spokesman Dmitry Peskov echoed the sentiment, telling media that "We simply will not cooperate with them on non-market principles."
"Energy markets are at fever pitch. This is mainly in Europe, where anti-Russian measures have led to a situation where Europe is buying liquefied natural gas (LNG) from the United States for a lot of money - unjustified money. U.S. companies are getting richer and European taxpayers are getting poorer," Peskov also said on Friday.
Peskov also said there would be retaliatory steps but provided no details of their nature.
Redirecting crude oil cargos from Europe to Asia is widely seen as Russia’s one good move in this situation. It has already been doing it. The U.S. and the UK banned imports of Russian crude and fuels soon after Russia’s invasion of Ukraine. Canada was never an importer of Russian oil.
The European members of the G7 are part of the EU, which greenlit an embargo on Russian oil and fuels, due to kick in later this year. Japan, however, will continue to receive Russian oil from Sakhalin-2 without capping its price because it is critical for its energy supply.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.