- If a US-led oil price cap is imposed, Russia will ship more crude to Asia, its energy minister said.
- G7 ministers have agreed to back a price cap on Russian oil to limit Moscow's energy revenues.
- Russia's oil exports have stayed strong despite sanctions thanks to a pivot to India and China.
Russia will respond to a US-led oil price cap by shipping more crude supplies to Asia, its energy minister said Tuesday.
Nikolai Shulginov also warned that Western efforts to limit prices paid for Russia's oil exports will unsettle the market, according to a Reuters report.
"Any actions to impose a price cap will lead to deficit on (initiating countries') own markets and will increase price volatility," Shulginov said at the Eastern Economic Forum, per Reuters.
G7 finance ministers on Friday endorsed the plan to cap the price of Russian crude, in an effort to hit Moscow's still healthy energy revenues and in turn, funding for President Vladimir Putin's war machine.
Russia has raked in healthy revenues for its oil exports, which have held up despite sanctions thanks to a successful pivot to buyers in Asia. In June, China and India accounted for about 50% of seaborne oil exports from Russia, and sales of its crude are expected to to rise to $285 billion in 2022.
Meanwhile, Europe is still taking in high levels of Russian oil, despite its governments' commitment to shunning the supplies, Bloomberg reported. It is importing 1 million barrels of crude a day in an effort to secure supply before sanctions on Moscow take effect in just three months and before winter kicks in, the report said.
Just before the agreement, Moscow warned it wouldn't sell its oil and oil products to countries that go along with the US-led plan. Some Western countries have urged India, which has bumped up its Russian oil imports, to sign up.
The measure would stop refiners, traders, and financers from handling Russian oil unless it was traded below a set price. In recent months, the US has been urging its G7 allies — Canada, France, Germany, Italy, Japan, and the UK — to bring in the cap.
"This is the most effective way, we believe, to hit hard at Putin's revenue and doing so will result in not only a drop in Putin's oil revenue, but also global energy prices as well," White House spokesperson Karine Jean-Pierre said last week, ahead of the agreement.
Yet some oil market analysts have warned the plan could send crude prices soaring, if Russia decides to slash its oil production in retaliation.
Oil prices soared past $120 a barrel after Russia invaded Ukraine thanks to worries about global supply, and the knock-on effect helped send inflation soaring around the world. Those concerns intensified as the US brought in an embargo on Russian energy imports and the EU agreed to a phased ban.
In recent weeks, oil prices have trended downwards as investors grow increasingly worried a recession could weigh on demand. Brent crude futures, the global benchmark, were down 2.7% at $93.14 at last check Tuesday, while WTI crude futures, the US benchmark, were 0.23% down from Friday's settlement to trade at $86.68.