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Kremlin says it does not recognise Western price cap on its oil

Published 2023-03-07, 05:33 a/m
© Reuters. FILE PHOTO: A view shows oil tanks at Volodarskaya LPDS production facility owned by Transneft oil pipeline operator in the village of Konstantinovo in the Moscow region, Russia June 8, 2022. REUTERS/Maxim Shemetov/File Photo

(Reuters) - The Kremlin said on Tuesday that it did not recognise the price cap introduced by Western countries on its oil exports, after the United States said that the cap was "working well".

Washington was one of the key architects of the Western price cap on Russian oil, which aims to drive down Moscow's revenues used to fund its invasion of Ukraine.

"We do not and will not recognise any cap. We are working so that this system does not harm our own interests," Kremlin spokesman Dmitry Peskov told reporters.

Russia's economy has proved remarkably resilient in the face of tough Western sanctions, but the price cap has complicated its efforts to sell oil globally.

Moscow, which accounts for around 10 percent of global oil supplies, said last month that it would cut output by 500,000 barrels per day in March in response to the price cap.

© Reuters. FILE PHOTO: A view shows oil tanks at Volodarskaya LPDS production facility owned by Transneft oil pipeline operator in the village of Konstantinovo in the Moscow region, Russia June 8, 2022. REUTERS/Maxim Shemetov/File Photo

U.S. officials argue that the price cap is working, as Russia's Urals blend - a benchmark of Moscow's exports - sells at a steep discount to international marker Brent.

"I think the beauty of the process is that it is working and that Russian oil and Russian products are being traded below the price cap," U.S. Energy Envoy Amos Hochstein said on Monday.

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