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Russia warns West: Energy price cap is your undoing

Russian State Duma Speaker Vyacheslav Volodin takes part in a military parade on Victory Day, which marks the 77th anniversary of the victory over Nazi Germany in World War II, in central Moscow, Russia’s Red Square, May 9, 2022. REUTERS/Maxim Shemetov/File photo

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LONDON, Sept 9 (Reuters) – Russia warned the West on Friday that a plan to try to cap the price of Russian oil and gas exports in retaliation for the war in Ukraine would fail and ultimately destabilize the United States and its allies. .

Before the European Union announced price caps on Russian gas on Wednesday, President Vladimir Putin threatened to cut supplies if such caps were imposed, warning the West it would freeze like a wolf’s tail in a fairy tale. Read more

The Group of Seven major industrialized nations wants to impose an oil price cap that would disallow insurance, financing and broking for oil commodities that exceed yet-to-be-fixed price caps on crude and two other oil products. Read more

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Russian Foreign Ministry spokeswoman Maria Zakharova said the West did not understand how such actions would ultimately affect their country.

“The collective West does not understand: introducing a limit on the prices of Russian energy resources will lead to slippery ground under its own feet,” said Zakharova.

A top Russian lawmaker said on Friday that the West’s plans would fail and prices would soar beyond their attempted artificial price ceiling.

“What G7 state officials call a price ‘ceiling’ will become a price floor,” Vyacheslav Volodin, the speaker of the Duma, the lower house of the Russian parliament, wrote on his Telegram channel.

He said the global market is not limited to seven countries.

Western efforts to punish the world’s biggest producers of natural resources, from oil and gas to gold, metals, coal and timber, will not be an easy task, especially since China, India and other consumers are still happy to keep buying.

Selling oil and gas to Europe has been one of Russia’s main sources of foreign currency earnings since Soviet geologists discovered oil and gas in the Siberian swamps in the decades after World War II.

Russia is the world’s second largest oil exporter after Saudi Arabia, the world’s top natural gas exporter. Europe typically imports 40% of its gas and 30% of its oil from Russia.

Since the war began, European Union customers have vowed to reduce their dependence on Russian energy while Russia has cut or shut supplies on three of its largest western gas pipelines while oil supplies have been redirected east.

Putin says that if Western consumers want to distance themselves from Russian power, they will send it east to major economies like China and India.

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Reuters reports; Edited by Guy Faulconbridge

Our criteria: Thomson Reuters Trust Principles.

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