Russian President Vladimir Putin on Wednesday announced that Moscow would not sell oil at a lower price cap after the Group of Seven (G7) pledged to put a cap on the price of Russian oil sold across the world.

Speaking at the Russian Energy Week 2022 event at the Russia state-affiliated media – RT, Putin said, “I have to say that Russia will not act against our own benefit, we will not act to decrease our standing by providing oil or gas at lower prices. No, we will not succumb to this. We will not play by the rules others set and will not act to our detriment.” Western countries are stepping up efforts to strip Russia of its largest source of income ‘oil’.

As the war in Ukraine nears its eighth month with no resolution in sight, the West suspects the Kremlin is bankrolling the invasion with its profits from the continued sale of fossil fuels, which make up over 40 per cent of its budget, reported Euronews.

The cap by G7 would prevent Russian cargoes from selling oil that exceeds the still-undefined G7 limit. As a result, Russia would be deprived of a significant portion of the oil revenues that it would otherwise earn without the cap.
According to Russia’s central bank, crude oil exports accounted for Euro113 billion in 2021, on top of the Euro70 billion earned from refined products, such as gasoline and diesel, reported Euronews.

Recently, Saudi Arabia and Russia, acting as leaders of the OPEC Plus energy cartel, agreed to their first large production cut in more than two years in a bid to raise prices, countering efforts by the United States and Europe to choke off the enormous revenue that Moscow reaps from the sale of crude.

President Biden and European leaders have urged more oil production to ease gasoline prices and punish Moscow for its aggression in Ukraine. Putin has been accused of using energy as a weapon against countries opposing its invasion of Ukraine, and the optics of the decision could not be missed, reported The New York Times.

The White House was not happy. “The president is disappointed by the shortsighted decision by OPEC Plus to cut production quotas while the global economy is dealing with the continued negative impact of Putin’s invasion of Ukraine,” Brian Deese, the director of the National Economic Council, and Jake Sullivan, the national security adviser, said in a statement.

The cut of two million barrels a day represents about 2 percent of global oil production.

By reducing output, OPEC Plus was also seeking to make a statement to energy markets about the group’s cohesion during the Ukraine war and its willingness to act quickly to defend prices, analysts say.

Out of all sanctions imposed by the bloc, this gradual ban on Russian oil is arguably the most radical decision owing to its potentially disruptive impact on the economies of both Russia and Europe. It was also subject to fraught negotiations between EU countries, reported euronews.

The West now plans to go beyond national embargoes.

An international price cap “will help deliver a major blow for Russian finances and will both hinder Russia’s ability to fight its unprovoked war in Ukraine and hasten the deterioration of the Russian economy,” said US Treasury Secretary Janet Yellen.

But analysts warn the G7 initiative is untested and ridden with risks and unknowns, many of which escape Western control. A botched implementation, they say, could reverberate on a global scale.