Russia retaliates against EU price cap, signs gas swap deal with Iran

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On Thursday, the Russian Foreign Ministry called out the EU's decision to put a price cap on Russian oil exports to third countries, namely Cyprus, Malta, and Greece, and pledged to sell oil to countries that honor free market principles.  

Russian Foreign Ministry spokeswoman Maria Zakharova told reporters, "The Group of 7’s plan to set a voluntary price ceiling on oil again proves that the principles of a market economy are alien to Brussels and Washington." 

"We will respond by reorienting oil exports to countries that are ready to cooperate with us under normal terms," reminding that Russia's President Vladimir Putin warned that Russia would not agree to trade under terms that go against the country's interests.

Putin: the price cap, "an extremely idiotic decision"

After months of debate, the EU reached an agreement to impose a price cap on Russian oil sales to third countries in an attempt to block Moscow's use of EU-registered vessels for its oil exports, all while excluding pipeline deliveries from the 8th round of sanctions on Russia, Politico Europe reported on Tuesday.

The agreement was reached despite Cyprus, Malta, and Greece's opposition which had previously voiced their concern on the matter due to its impact on the shipping industry in the countries, have been promised concessions by Brussels that proposed measures induced through a "monitoring system" to help ease the effects of the embargo that might emerge as a "significant loss of business" if commercial vessels were to resort to reflagging. A final agreement is expected to be reached on Wednesday by EU ambassadors, seven diplomats told Politico on the condition of anonymity.

In response to this, Putin said on Wednesday that Russia will stop supplying oil and gas to countries that impose price ceilings. He stated that Russia will honor its contractual responsibilities and hoped that other countries would follow suit.    

"We will not supply anything at all if it is contrary to our interests, in this case economic (interests)," he said. "No gas, no oil, no coal, no fuel oil, nothing."  

Russia signs oil and gas swap agreement with Iran

Russian Deputy Prime Minister Alexander Novak announced earlier today that Russia is planning to sign an agreement with Iran on swap oil and gas supplies by the end of 2022.

When asked whether an agreement with Iran on oil and gas exchange operations can be concluded before the end of 2022, Novak said "I am counting on it," adding that work is underway and that ministries and companies are cooperating.  

"Technical details are being worked out. There are some issues in terms of transport, logistics, price, and tariff formation. That is, these are commercial contracts that must be worked out in detail. Our economic operators are working in this direction," Novak concluded.

Read more: OPEC+ to cut oil production by 2mln barrels per day

Yesterday, OPEC+ countries agreed to effect steep oil cuts and reduce production by two million barrels per day.

The US is concerned that OPEC's probable decision to reduce oil production will pose serious problems for the country and may even be interpreted as a hostile act, according to a US Treasury report.

The Biden administration assembled its top energy, economic, and foreign policy officials and entrusted them with lobbying Middle East allies such as Saudi Arabia, the United Arab Emirates, and Kuwait to vote against decreasing oil production.

To persuade its OPEC allies, the US proposed to purchase back up to 200 million barrels of oil from its OPEC partners.

Following the meeting, Saudi Energy Minister Prince Abdul Aziz Bin Salman said that OPEC+ is prepared to adapt to the situation even if it worsens.

"It goes both ways, it does not go one way... We shall act and react to what is happening to the world global economy in the most responsible way," the Minister said during a press conference.

Read more: West suffered from sanctions against Iran, Russia: Iranian diplomat