The Decree of the President of Russia on response measures to the oil price ceiling introduced by Western countries is at the final stage.
This was announced on Friday, December 23, by Deputy Prime Minister of the Russian Federation Alexander Novak.
“It has already been practically agreed upon at the exit.
Within the framework of this decree, there will be a ban on the supply of oil and oil products to those countries and those legal entities that will demand compliance in contracts with the price ceiling introduced by the European Union, ”Novak said on the air of the Russia 24 channel.
According to the Deputy Prime Minister, the mechanism for limiting the cost of raw materials is being used for the first time in history, and now no one can say exactly how it will work.
Moscow categorically opposes the use of such measures.
“We do not accept any interference in energy markets, in general, in market instruments in general.
Because in reality this will only lead to risks, to a shortage of resources in the energy market, to rising prices,” Alexander Novak emphasized.
Let's remind, since December, 5th the European Union has refused sea deliveries of the Russian oil.
At the same time, the EU, the G7 states and Australia banned their companies from insuring and transporting raw materials from the Russian Federation to third countries at a price higher than $60 per barrel.
From February 5, 2023, the relevant restrictions should also apply to petroleum products.
The ban on the import of Russian hydrocarbons in the West was explained by the desire to reduce energy dependence on the Russian Federation and put pressure on Moscow in connection with the events in Ukraine.
In turn, the establishment of the marginal cost of oil is intended to limit Russia's excess profits from the sale of raw materials and stabilize the situation with prices on the world energy market.
Earlier, the Kremlin and the government have repeatedly stressed that Moscow will not sell energy to those states that join the price ceiling.
Russian President Vladimir Putin plans to sign a decree on this on December 26-27.
As the head of state said the day before, the measures will be of a precautionary nature, since the West is trying to impose administrative rules on price regulation on oil producers.
Thus, buyers of energy resources are trying to introduce into the consciousness and practice of the whole world completely new tools that are not inherent in a market economy.
“Imagine: you wanted to come and buy, relatively speaking, Mercedes or Chevrolet.
They came and said: I will buy for five rubles and no more.
Okay, you buy one, two, three cars, and then Mercedes closes because Mercedes or Chevrolet production will be unprofitable.
The same thing is happening in the energy sector, everything is the same, one to one, ”Putin explained.
At the same time, there are currently no free capacities in the world to replace Russian oil.
As Vladimir Putin noted, in recent years, many developed countries have actively promoted the transition to renewable energy sources and stopped investing in new projects for the extraction of raw materials and field development.
“And now they are also trying to establish a price ceiling in an administrative manner.
This is the road towards the destruction of world energy.
There may come a moment when the underinvested industry will no longer provide the market with the required volume of products, and then prices will skyrocket and hurt those who are trying to introduce these tools, ”the president explained.
RIA News
© Sergey Guneev
Russian companies, meanwhile, continue to reorient their oil supplies.
According to Alexander Novak, recently the enterprises have significantly increased the export of energy resources to the countries of the Asia-Pacific region, as well as to Africa and Latin America.
However, against the background of the loss of the European market, Moscow is now forced to provide significant discounts on its raw materials to attract buyers from more remote regions of the world.
As a result, according to the Ministry of Finance of the Russian Federation, a barrel of Russian Urals oil is currently selling for about $57.49.
In turn, the cost of raw materials of the benchmark Brent brand now fluctuates around $83 per barrel.
Moreover, Russia will need some more time to fully replace buyers from Europe.
In this regard, oil production in the Russian Federation may slightly decrease in the near future.
According to Alexander Novak, at the beginning of 2023, the volume of production of raw materials in the country will decrease by about 5-7%, or by 500-700 thousand barrels per day.
“We believe that in the current situation, it is even possible to take the risks of reducing production, rather than be guided by the sale policy regarding the price ceiling.
Today it is $60, tomorrow it can be anything, and becoming dependent on some decisions made by unfriendly countries is unacceptable for us,” Novak stressed.
"Harm themselves"
As Alexander Novak recalled, this year Europe and the United States have already faced a rush increase in fuel prices and a record acceleration of inflation.
Moreover, in the EU countries, due to the rise in the cost of energy, production began to be massively closed.
Against this background, the establishment of marginal oil prices can only aggravate the current situation, the Russian Deputy Prime Minister believes.
“Our colleagues, the so-called partners, who introduce all these economic measures (considering them economic, but in fact they are not economic, but political), from the point of view of the economy, they only harm themselves,” Novak emphasized.
RIA News
© Alexander Astafiev
Earlier, a similar point of view was expressed in the Russian parliament.
According to Federation Council Chairman Valentina Matviyenko, games with price ceilings will not end well for the authors of such initiatives.
“They will only lead to the fact that the volume of investments in production in the world will decrease and the volume of hydrocarbon supplies to international markets will decrease.
Accordingly, the guilt will grow (of the initiators of the restrictions. -
RT
).
They will punish their citizens, their industry,” Matvienko said during a press conference on December 21.
In turn, the Chairman of the State Duma Vyacheslav Volodin warned about the "decline of Europe" after the introduction of the price ceiling.
As the parliamentarian recalled, for many years the economic well-being of the EU was built on cheap energy resources from Russia.
Now the countries of the region will have to buy hydrocarbons at much higher prices from other suppliers, including the United States.
As a result, according to Volodin, production in the European Union becomes unprofitable and enterprises are forced to close or transfer capacities to other countries with cheaper energy.
Moreover, ordinary citizens will pay for such an adventurous policy of European states, the speaker of the State Duma is sure.
“For Europeans, the times of social stability, economic growth and low prices are in the past.
Today, they finally began to admit that Europe had its best years thanks to Russia and its resources... But they cannot change the situation.
Having fallen under the influence of the United States, the European Union lost its subjectivity and sovereignty.
Countries that are unable to pursue an independent policy in the interests of their own citizens have no development prospects, ”Volodin wrote in his Telegram channel.
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© Vitaliy Timkiv
As Igor Yushkov, an expert at the Financial University under the Government of the Russian Federation, told RT, at the moment the situation on the world oil market remains uncertain.
Thus, the threat of a global recession and a massive increase in interest rates lead to a weakening of business activity, a reduction in transportation and a drop in demand for fuel.
As a result, world oil prices have been steadily declining in recent months.
“However, there is another trend related to the dynamics of China's development.
The Chinese authorities began to lift tough covid restrictions.
This should lead to an increase in production in the country.
People will move more actively, which will lead to an increase in demand for fuel and an increase in oil prices,” Yushkov said.
Moreover, if the demand for energy resources in China continues to grow, and Russia reduces oil exports to the world market, then the global energy shortage will worsen and prices will rise even higher, the specialist did not rule out.
A similar assessment is shared by the head of the analytical department of AMarkets Artyom Deev.
“Russia is one of the largest suppliers of oil to the world market.
A decrease in production in the Russian Federation can lead to an increase in raw material prices on a global scale, and this will again become a factor in the growth of inflation in the developed economies of the world, ”said the interlocutor of RT.
gas dead end
It is noteworthy that along with the price ceiling for oil and oil products from Russia, the EU plans to limit the cost of natural gas, but for all suppliers.
The corresponding mechanism should start working from February 15, 2023.
The tool is planned to be activated if, for three consecutive days, raw materials at the TTF hub in the Netherlands are traded for more than €180 per 1 MWh (about $2,000 per 1,000 cubic meters) and its cost exceeds world prices by more than €35 on SPG.
However, if the initiative works, Russia, as in the case of oil, will redirect its gas supplies from Europe to other markets, Alexander Novak said.
In his opinion, all other sellers of raw materials can do the same.
“Today we see a shortage, a shortage of gas in the world market.
This gas can go to the Asia-Pacific region - and we will get a deficit on the European market, which will be covered by no one knows what.
It is not known how the price will be formed in the future.
Suppliers will leave for other electronic trading exchanges where there are no such restrictions,” Novak explained.
Thus, the attempts of the European authorities to contain gas prices are unlikely to “work in a serious way,” believes
deputy chairman
Security Council of the Russian Federation Dmitry Medvedev.
In his opinion, this decision was largely taken from the EU's powerlessness to influence the situation, and the initiative itself was dictated not by economic logic, but by "hatred of Russia."
“The limit is set at a level that a couple of years ago would have seemed surprising to absolutely all participants in the gas market... After all, no one... could have imagined the price of €180 per 1 MWh even in the happiest or worst dream.
This means that gas prices will remain at a very high level for European consumers.
Conclusion: moronic Russophobia, and with it the impoverishment of ordinary Europeans, is growing.
Merry Christmas (Merry Christmas. -
RT
),” Medvedev wrote on Telegram.