Putin warns of ‘grave consequences’ to oil price caps

Russian President Vladimir Putin warned Thursday that Western plans to introduce oil price caps could have “grave consequences” for energy markets, speaking during a telephone conversation with Iraq’s prime minister.

“Vladimir Putin stressed that such actions are contrary to the principles of market relations and are highly likely to lead to grave consequences for global energy markets,” the Kremlin said in a readout of the Russian leader’s call with Iraqi Prime Minister Mohammed Shia al-Sudani.

The Kremlin said both sides had also spoken positively of the two countries’ work within the framework of OPEC + which helps “stabilise the world oil market.”

Western countries have pummelled Russia with unprecedented sanctions after Putin sent troops to Ukraine on February 24.

On Tuesday, the US Treasury Department said that Washington and its allies were now planning to finalise a price cap for Russian oil in “the next few days,” as they seek to cut off a critical source of funding for Moscow.

The price cap would be the basis for a ban set to take effect on December 5, which would ban firms from transporting or providing insurance for Russian oil shipments sold above the fixed price.

On November 23, European Union governments failed to reach a deal at what level to cap prices for Russian sea-borne oil under the Group of Seven nations (G7) scheme and will resume talks on Thursday evening or on Friday, EU diplomats said.

Earlier on Thursday (November 24) representatives of the EU’s 27 governments met in Brussels to discuss a G7 proposal to set the price cap in the range of $65-$70 per barrel, but the level proved too low for some and too high for others.

“There are still differences on the price cap level. We need to proceed bilaterally,” one EU diplomat said. “The next meeting of ambassadors of EU countries will be either tomorrow evening or on Friday,” the diplomat said.

The G7, including the United States, as well as the whole of the European Union and Australia, are slated to implement the price cap on sea-borne exports of Russian oil on December 5.

The move is part of sanctions intended to slash Moscow’s revenue from its oil exports so it has less money to finance its invasion of Ukraine.