Saudi Arabia threatens to cut off oil supplies if price ceiling is introduced

Riyadh will refuse to supply oil to countries that will impose restrictions on its price, declared Saudi Energy Minister Prince Abdulaziz bin Salman in an interview with Energy Intelligence.

“If a price cap is imposed on Saudi oil exports, we will not sell oil to any country that imposes a price cap on our supplies,” the minister said. He stressed that in this case, the country will reduce oil production. “And I wouldn’t be surprised if others did the same,” he concluded.

In particular, the minister spoke about “new levels of risk and uncertainty” due to the US NOPEC bill. In his opinion, the anti-cartel project will exacerbate market volatility and have a negative impact on the oil industry.

NOPEC (No Oil Producing and Exporting Cartels Act) is an anti-cartel bill that was introduced by the US Congress but never passed. According to him, the United States will be able to sue the countries participating in the OPEC agreement and their partners.

On December 5, 2022, the G7 countries, Australia and the European Union introduced a cap on Russian oil prices of $60 per barrel. Also, the G7 countries and the EU have set a limit on export prices for expensive oil products from Russia (for example, diesel) at $100 per barrel, and for cheaper ones (fuel oil) at $45 per barrel.

March 14 Assistant Secretary of the Treasury for Economic Policy Ben Harris declaredthat Washington and the EU are planning to review the operation of the price ceiling mechanism for Russian oil products. At the same time, Harris admitted that Brussels could lower it by $5.

The Russian authorities have repeatedly said that they will not supply energy resources to countries that join the price ceiling for Russian oil and gas. On December 27 last year, Russian President Vladimir Putin signed a decree on retaliatory measures to the price ceiling, according to which a ban is introduced on the supply of Russian oil and petroleum products to foreign companies and individuals if the contracts directly or indirectly provide for a price cap mechanism.