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President Vladimir Putin on Friday vowed that Russia and its economy will endure unscathed in the face of the West’s price cap on Russian oil exports. 

In the fresh comments, he slammed the EU, G7, and Australia sponsored $60-a-barrel cap as “stupid” while again warning it would only backfire for the West, stressing that inevitably energy prices will “skyrocket”.

Additionally, Putin previewed that Moscow’s response and final course of action will be decided upon and announced in the coming days. He reiterated a further threat that among these options being considered is that Russia might not sell oil to countries complying with the cap, causing oil to initially jump on his Friday morning (Western time) comments.

“As for our reaction, I have already said that we simply will not sell to those countries that make such decisions,” Putin told reporters at a press event in Bishkek.

Meanwhile, following the EU/G7 price cap taking effect Monday, it’s become clear that China and potentially other Asian countries are not complying with the “Price Cap Coalition”

“Russia’s ESPO grade, the crude from Russia’s Far East, is selling in Asia above the $60 price cap as it appears that Russia is currently handling the short Russian Far East-China route with Russian tankers and insurance, traders told Bloomberg on Friday,” OilPrice notes.

The initial spike in crude in the minutes after Putin’s comments hit global headlines was soon after erased

“Some independent refiners in China—the so-called teapots—have already placed orders for ESPO crude with January delivery of the grade, whose price was assessed at $67.11 per barrel on Thursday by Argus Media,” the report underscores.

According to Russia’s Vedomosti newspaper, as cited in Bloomberg, the Kremlin is mulling three options in response: 

  • Full ban on crude sales to those nations that supported the price cap, including non-direct sales via third parties

  • Exports ban on those contracts that include price cap, regardless what country will receive Russian crude

  • Setting the maximum discount on Russia’s Urals to Brent benchmark

“We will think, maybe even about the possible, if necessary… reduction in production,” Putin added in the Friday comments. He noted such a drastic step remained only a “possibility”, however, as Russia still has firm agreements with OPEC+ regarding production.

“We are thinking about this, there are no solutions yet. And concrete steps will be outlined in the decree of the president of Russia, which will be released in the next few days,” Putin added.

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