Russia’s Response to Western Price Cap Likely to Hike Global Oil Prices: Expert

 / Go to the mediabankAn oil pumpjack is seen in Almetyevsk District, Tatarstan, Russia. / Go to the mediabankMOSCOW (Sputnik) – Russia can be expected to cut its oil production in response to the Western price cap, which will create shortages on the global market and lead to a significant price hike, Mamdouh Salameh, an international energy economist and visiting professor of energy economics at the ESCP Europe Business School in London, told Sputnik.”President Putin has already said he will never sell Russian oil at the price cap level and that he will halt oil exports to countries implementing the cap, and could also cut production in retaliation, thus creating shortages in the market and hiking prices far above the price cap,” Salameh said.This will, in turn, force Western countries to pay more for their crude oil imports, thus feeding inflation and deepening recession, according to the economist.Salameh also disagreed with Zoltan Pozsar, an investment strategist at Credit Suisse financial services company, who voiced fears last week that Moscow could create an oil-for-gold payment mechanism in response to the price cap.”Russia neither needs such a mechanism, nor is it practicable or likely. Russia will only accept rubles for any sale of its oil exports to unfriendly countries, while accepting other hard currencies from friendly countries. There is also the probability that it will accept China’s petro-yuan and India’s rupee for their oil imports,” the expert said.Russian Deputy Prime Minister Alexander Novak, commenting on the West’s decision to introduce the price cap, said that Moscow would not accept it. Russia is ready to work only with those consumers who comply with market conditions, Novak added.RussiaPutin: Russia Won’t Suffer Losses After West Imposes Oil Price Cap – No Matter What9 December, 13:34 GMTThe European Union placed a price cap of $60 per barrel on Russian crude oil on December 5. The G7 nations and Australia have also capped Russian oil exports at $60 per barrel. On Monday, Kremlin Spokesman Dmitry Peskov said that Russian President Vladimir Putin would sign a decree on retaliatory measures to the price cap in the coming days.

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