Tuesday, May 21, 2024

Putin says cap on oil doesn’t matter to Russia 

Russian President Vladimir Putin addressed the economic issues on Friday as he commented on the western sanctions limiting the price of Russian oil

The head of state noted that the cap, introduced by the G7, the EU and Australia, won’t affect Russia at the moment.

“The imposed cap corresponds with the prices at which we sell today. In this sense, the decision does not affect us in any way. To be honest, it is not important,” Putin said at a press conference following his visit to Kyrgyzstan. “We will not suffer losses – no matter what,” the president stressed.

He warned, however, that such a step may undermine global energy markets, resulting in an oil industry collapse worldwide if consumers are able to dictate prices.

“Following some harmful non-market decision would be stupid for everyone, including the consumers; because they must realize – if they will insist on prices that are pleasant to them, even if they achieve this, and the prices will go down, investments will be reduced to zero. In the end, prices will skyrocket, hitting those who offer such solutions,” he noted.

“As for the good results [in the Russian economy], it could have been better, we would like it to be better. The truth is, however, the forecasts suggested a 20% economic recession in Russia; there is a recession, but it is at 2.9%. That’s, of course, a huge difference, and we understand that those who predicted such a development of events for us made a major mistake,” Putin said. The Russian leader noted that, despite a certain slowdown in the economy, “the situation is indeed better than in many other countries in a number of ways,” since Russia shows better inflation numbers than Europe.

He also noted that Moscow would consider cutting oil output as a viable response to the price cap introduction.

“As for our reaction, I have already said that we simply won’t sell [oil] to the countries that make such decisions. Maybe, we will even consider the possibility – I’m not saying that it is decided – we will consider, if necessary, the possibility of reducing [oil] output. We have an agreement with OPEC+ on a well-known production target,” he added.

Since 2021, energy prices have been surging globally, but the situation deteriorated after February 2022, when the US, the EU, Britain and their allies introduced sanctions on Moscow, responding to Russia’s military operation in Ukraine. As a result of the sanctions, gas prices have accelerated their growth, resulting in an energy crisis in Europe.

Nevertheless, G7 nations and the EU (which as a bloc is closely associated with the group), as well as Australia, imposed a price cap on Russian oil, setting it at $60 per barrel.

The cap, which came into effect on December 5, will be reviewed every two months to remain at 5% below the International Energy Agency benchmark. Moscow lambasted the price cap as an attempt to manipulate “the basic principles of free markets,” noting that Russia won’t sell oil to countries that adopt it.

Ukraine Matter

Commenting on the op in Ukraine, the president stated that the crisis’ settlement would be lengthy.

He referenced ex-Chancellor Angela Merkel’s statement, who recently said that the 2014/15 Minsk Agreements were signed in order to buy time for the Kiev regime to prepare for a military standoff with Russia.

“Honestly, this was completely unexpected for me. This is disappointing. Frankly speaking, I did not expect to hear this from the former Federal Chancellor. I always assumed that the leadership of the Federal Republic is sincere with us,” Putin said during a press conference, commenting on Merkel’s statement.

It is quite understandable that Germany was on the side of Ukraine, supported Ukraine, he noted.

“But it still seemed to me that the leadership of the Federal Republic always sincerely sought a settlement on the principles that we agreed on and that were achieved, including within the framework of the Minsk process,” Putin added.

The President noted that Merkel’s statement “only says that we did everything right from the point of launching a special military operation.”

“Now, of course, the issue of trust emerges. Of course, it is almost at zero, and yet after such statements, a question arises: how could we even negotiate [with Europe]? Is it possible to negotiate with someone? And what are the guarantees?” Putin told reporters.

The Russian president noted that in the end, all sides will have to accept the reality of the situation as it is. He also said there is no need in another mobilization wave, adding that the military is working on the most pressing issues.

Russia launched its special military operation in Ukraine on February 24, after the Donetsk and Lugansk people’s republics called for help amid Ukrainian attacks. President Putin stressed that Moscow aims to stop the eight-year-long war, waged by the Kiev regime against the people of Donbass.

Since October, Russia has been targeting power grids, the defense industry, military command posts and communications facilities across Ukraine in response to a terror attack on the Crimean Bridge perpetrated by Ukrainian intel services. Kiev claimed that almost half of the country’s energy system had been put out of service due to the strikes.

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