US oil price cap proposal will fail – Moscow

A Russian deputy prime minister says global crude prices depend on supply-demand balance

Setting a price cap on crude oil from certain countries will not work because oil prices are pegged to the balance of supply and demand across the world, Russian Deputy Prime Minister Aleksandr Novak said on Thursday.

“It is not clear where this figure came from, they can say whatever they want. The price should be formed by the market method based on the balance of supply and demand,” Novak said at Russian Energy Week, following the latest US proposal to set a $60-a-barrel price ceiling on crude from Russia.

The top official added that Moscow wouldn’t supply energy to nations that adopt trade policies contradicting the terms of existing oil and gas contracts.

“It was clearly stated that we will not supply oil to countries that will use the price ceiling. This is a bad precedent that could at any moment be extended to other suppliers, to all global trade,” Novak said.

He added that global prices for crude are expected to reach around $100 per barrel in 2023.

READ MORE: US Treasury Secretary reveals Russian oil price cap target

Earlier this week, US Treasury Secretary Janet Yellen said a probable price cap on Russian oil exports in the $60-a-barrel range was expected to reduce Moscow’s energy revenues while allowing profitable production, thus keeping Russian crude on the global market. Yellen stressed that the measure is still being discussed by the US and its Western allies.

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