Moscow will suspend oil supplies to so-called “hostile countries” if they impose “restrictions” on the price of Russian oil. This was announced by Russian Deputy Prime Minister Alexander Novak, according to reports from the Russian agency Tass. The Kremlin statement is released on the eve the summit of the G7 countries where this possibility should be discussed, tends to ease the pressure on prices and reduce Moscow’s revenues. Russia almost makes a profit one billion euros from the sale of its hydrocarbons. The plan would allow Russian oil buyers who adopt the price cap to continue receiving essential services such as bank financing and insurance of loads of oil tankers coming from Russia. The European Union, the United Kingdom and Switzerland have plans to ban their companies from providing such services for Russian shipments starting next December.
“This is the most effective way, we believe, to hit Putin’s revenue hard,” the White House press secretary said two days ago. Karine Jean-Pierre. At the moment it is not clear what the price limit would be nor which countries are oriented to join. For now only the UK has stated that it will support the planwith the Chancellor of the Exchequer (the British Minister of Economy, ed) Nadhim Zahawi who said the roof will be “most effective if supported by the broadest possible coalition.” Russia has diverted many of its crude cargoes to China, India and Turkey whose purchases have offset the decline in European ones. Moscow is already selling its crude oil at a discount compared to current prices (around 90 dollars per barrel). The price ceiling would therefore have to be quite low to really affect Russian revenues. Russia is among the top three oil producers in the world together with the United States and Saudi Arabia. It has 107 billion barrels of fields, the fifth largest in the world and extracts about 10 million barrels per day, 80% of which are destined for export. Unlike the other G7 countries, the United States is almost self-sufficient. They are net exporters but the country’s refineries have a limited capacity to process oil extracted from tar sands and must therefore import other qualities from abroad.
The state-owned Russian gas giant Gazprom meanwhile he affirms that even if the great European countries were to be able to bring their own gas stocks “close to the maximum level” allowed by storage, this “does not guarantee that we will reliably survive the autumn-winter season”. The company recalling that Germany, between October 1st and March 31st last year, consumed 57 billion cubic meters of gas, equal to 9.5 billion per month. Current stock levels, equal to 84% of stocks and 18.3 billion cubic meters, “are currently comparable to the average consumption of two months out of six” in the winter season, warns Gazprom. That Germany has an autonomy of a couple of months in the event of a total stop of flows from Russia Berlin itself said a few days ago.
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