War in Ukraine: Oil price cap would have 'serious consequences', Putin warns

War in Ukraine: Oil price cap would have ‘serious consequences’, Putin warns

The goal is to suffocate the Russian economy. And that does not please the Kremlin at all. Vladimir Putin warned on Thursday against “serious consequences” in the event of a cap on the price of Russian oil, while the countries in favor of such a measure must soon announce their decision.

“Such actions go against the principles of trade relations and will most likely lead to serious consequences for the global energy market,” Vladimir Putin said in a telephone interview with Iraqi Prime Minister Mohamed Chia al. -Sudani, according to a statement from the Kremlin.

The coalition of states wishing to impose a cap on the price of Russian oil, which includes the G7, the European Union and Australia, is expected to announce the proposed limit “in the coming days”, a Treasury official said on Tuesday, the ministry American Finance. The objective is to arrive at a maximum price for Russian hydrocarbons that can be put in place before the entry into force of new European sanctions, planned from December 5.

Rally as many countries as possible

This new series of sanctions provides in particular for prohibiting insurers and reinsurers from covering the maritime transport of Russian oil, European operators to be exempted in the event of an agreement if the oil is sold at a price lower than or equal to the pre-established ceiling.

Capping the price of oil sold by Russia should make it possible to reduce its financial resources and thus its ability to continue the offensive in Ukraine, but also to contain the rise in energy prices. This price must however remain higher than the production price, to encourage Russia to continue to sell it, and not to cut the floodgates.

The challenge is to rally as many countries as possible because the price cap will only work if all the major buyer countries participate, underline the experts, who point the finger in particular to the role of China and India. “Russia is currently making high profits from the export of raw materials such as oil and we want to oppose this resolutely,” argued German Finance Minister Christian Lindner.

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