Druzhba oil pipeline
© Reuters
The receiver station of the Druzhba oil pipeline between Hungary and Russia is seen at the Hungarian MOL Group's Danube Refinery in Szazhalombatta, Hungary, on May 18, 2022.
The Russian government has warned that it will suspend oil exports to states that impose a price cap on Russian energy resources, after Western powers announced that they are intending to take such a measure.

"We will simply not supply oil and petroleum products to such companies or states that impose restrictions, as we will not work non-competitively," Russian Deputy Prime Minister Alexander Novak told reporters Thursday.

Novak called the restrictions "completely absurd" measures and warned that price ceilings will significantly destabilize the oil markets.

Kremlin spokesman Dmitry Peskov also told reporters in a conference call that only the European people are paying the price for such measures.

"Energy markets are at fever pitch. This is mainly in Europe, where anti-Russian measures have led to a situation where Europe is buying liquefied natural gas (LNG) from the United States for a lot of money - unjustified money. US companies are getting richer and European taxpayers are getting poorer," Peskov said.

The warning came before a meeting of the Group of Seven (G7) on Friday, in which the finance ministers agreed to impose a price cap on Russian oil aimed at slashing Russia's revenues over its offensive in Ukraine.

European Commission chief Ursula von der Leyen said that the upcoming measures are designed to fight back against what she said were attempts by Russian President Vladimir Putin to manipulate the European energy market.

"I firmly believe that it is now time for a price cap on Russian pipeline gas to Europe," she told reporters on the sidelines of a meeting in the town of Murnau.

"We want to get this oil price cap over the line," British Finance Minister Nadhim Zahawi told a think tank event in Washington on Thursday, adding that he was hopeful that G7 finance ministers will "have a statement that will mean that we can move forward at pace to deliver this."

"It is important because British people at the moment are under huge pressure," he said, adding that "there is a real anxiety in households, in business, because of the energy spike."

Most European countries, including the UK, are grappling with a huge energy crisis, with skyrocketing oil and gas prices after sanctioning Russian energy over the conflict in Ukraine.

Comment: Businesses in the UK are being quoted over a 600% increase in their energy bills next year. Although this is of course only applicable for those that remain in business, because many more will have already gone bankrupt as lockdown fallout begins to bite:

The Biden administration has been pushing for governments to introduce the price cap in order to hit Russia's revenue.

"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 Press Secretary Karine Jean-Pierre said earlier this week.

Prior to the war in Ukraine, Europe was the biggest recipient of oil from Russia — the world's largest energy exporter — taking 2.2mn barrels a day of crude and 1.2mn barrels a day of refined products, according to the International Energy Agency.

The US has already blocked oil and other energy imports from Russia, while the European Union will ban most of Russian oil purchases by the end of the year.

Comment: The US has blocked energy supplies because it has alternatives, however it continues to buy Russia's uranium, because it is currently unable to produce its own.

It was known well in advance that these sanctions would backfire; it was not so well known that the US would be profiting from Europe's collapse. Note also that the West's proxy-war on Russia in Ukraine is also enabling the US to actually increase its military presence in Europe, a situation that would have faced significant pushback before.

Russia launched the "special military operation" in Ukraine on February 24, following Kiev's failure to implement the terms of the Minsk agreements and Moscow's recognition of the breakaway regions of Donetsk and Luhansk. At the time, President Putin said one of the goals of the operation was to "de-Nazify" Ukraine.