Russia warns that G7 attempt to cap oil price risks higher prices

Russian Foreign Ministry spokeswoman Maria Zakharova said on Thursday that attempts by the Group of Seven to cap oil prices may in fact cause them to rise.

“Those plans are anti-market and risky,” she told a weekly briefing.

The cap scheme was first mooted last month by U.S. Treasury Secretary Janet Yellen as part of a campaign to increase pressure on Moscow to end what the Kremlin calls a “special military operation” in Ukraine. The shape of the final deal and price level have yet to be announced.

The United States and European Union have announced restrictions on Russian oil purchases as a way of punishing Moscow.

Russian oil has already sold with a hearty discount to global grades amid difficulties with financing and logistics.

The price of Russian Urals blend stands at around $75 per barrel, in comparison to the Brent benchmark front-month futures of just below $100. Russia had initially drafted its 2022 budget using the Urals average price of $62.2 per barrel.

Zakharova also commented on a trip by U.S. President Joe Biden to the Middle East and reports that he is likely to ask the world’s leading oil producer Saudi Arabia to hike oil production in order to bring down high gasoline prices.

“We highly value longstanding cooperation with Saudi Arabia in energy,” the spokeswoman said.

She blamed high oil and gas prices on West’s “blunders” in energy policy as well as sanctions against large energy producers such as Russia, Iran and Venezuela.

President Vladimir Putin warned the West on Friday that continued sanctions against Russia over the conflict in Ukraine risked triggering catastrophic energy price rises for consumers around the world.