Russia not to supply oil to world market if price cap imposed

Russia's Deputy Prime Minister Alexander Novak says Moscow will not export oil to the world market if a price cap is imposed below the cost of production.

Novak made the remarks on Wednesday, following the United States' efforts to impose a price cap on Russian oil in an attempt to make it harder for the Kremlin to fund its ongoing war in Ukraine.

"If these prices that they are talking about are lower than the cost of producing oil, then of course Russia will not ensure the supply of this oil to world markets. This means we are simply not going to work at a loss," the Russian news agency Interfax quoted him as saying.

Earlier in the day, Russian President Vladimir Putin told reporters that oil prices would skyrocket if a cap were imposed. He also warned that Russian supplies sent via the biggest pipeline to Europe could be reduced further and might even stop.

Following Putin's warning, the European Union (EU) urged its member states to cut gas usage by 15% until March as an emergency step. The European Commission proposed a voluntary target for all EU states to cut gas use by 15% from August to March, compared with their average consumption in the same period in 2016-2021.

The proposal would enable Brussels to make the target mandatory in a supply emergency if the EU declared a substantial risk of severe gas shortages. The move, which needs the backing of EU states, will be discussed on Friday so ministers can potentially approve it on July 26.

"We believe that a full disruption is likely," an EU official told Reuters. "If we wait, it will be more expensive and it will mean us dancing to Russia's tune."

EU member states are trying to ensure storage facilities are 80% full by November 1, up from about 65% now.

Since the onset of Russia's military campaign in Ukraine on February 24, the United States and its European allies have been imposing waves of unprecedented against Moscow. Russia has been warning that such punitive measures will eventually backfire.

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In a retaliatory measure, Moscow has already significantly curtailed its gas supply to Europe — through the Nord Stream 1 pipeline that transports gas from Russia to Germany — by 40 percent. The largest single pipeline carrying Russian gas to Germany was also shut down for an annual maintenance on July 11 and is expected to last ten days.

Europe, however, fears that Moscow may extend scheduled maintenance to further limit European gas supplies, throwing plans to fill storage for winter into disarray.

There are other big pipelines from Russia to Europe. However, flows have gradually been falling as Ukraine shut down one gas transit route in May, accusing Russian forces of interference.

Meanwhile, Russia has cut off gas supplies to several European countries that refused to comply with a demand for payment in the country's national currency, the ruble.

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