8 Dec 2022 11:03

Changes in Russia's oil output because of price cap will not exceed spring fluctuations; global demand supports prices - Energy Ministry

MOSCOW. Dec 8 (Interfax) - Fluctuations in Russia's oil output because of the price cap being implemented will not exceed the values of spring fluctuations, First Deputy Energy Minister Pavel Sorokin said assuredly when commenting on the statement from the Central Bank of Russia (CBR) regarding possible shocks to the Russian economy owing to the said price cap being implemented.

"It is important to note here that the analysis in the publication was prepared with the reservation that the opinion of experts may not coincide with the opinion of the Central Bank. In general, we do not agree that the implementation of the price cap is an event that would lead to significant consequences for the Russian economy. Most of the markets are available for of our goods on adequate market principles, and the fluctuations in oil output that are possible are not critical and should not exceed the values of spring fluctuations," Sorokin said.

The first deputy minister also noted that global demand for oil and petroleum products supports oil prices despite the risks of a recession.

"The risk of a recession could of course add volatility, though the absence of excess oil supplies on the worldwide market and an obvious shortage in certain positions of petroleum products, for example, diesel, support prices," Sorokin said, adding that one should not forget about the flexibility of the ruble exchange rate in the case of fluctuations in oil prices.

"As for the experts themselves who prepared the report, we invite them to our place, so that they could use the full set of necessary data in the future when analyzing such events as the implementation of the price cap and related processes," Sorokin emphasized.

The CBR's department of research and forecasting the previous day stated in its "What Trends Say" bulletin that the ban on exporting Russian oil to Europe and the implementation of the price cap on Russian oil could significantly reduce economic activity in the Russian Federation.

"The ban on seaborne exports of Russian oil and petroleum products to Europe and the implementation of the price cap on Russian oil stand out among the new economic shocks that could significantly reduce the level of economic activity in the coming months," according to the bulletin.

Russian Deputy Prime Minister Alexander Novak also previously said that the European Union's and G7 countries' implementing of the embargo on importing Russian oil and the ban on transporting Russian oil, subject to non-compliance with the price cap, could slightly cut oil production in Russia.