Russia could cut oil output given Western price cap: official

Photo taken on June 2, 2017 shows the well drilling field of the Udmurtia Petroleum Corp project in Udmurtia, a republic in western Russia. (Xinhua/Bai Xueqi)

The price limit can only lead to a global decline in investment, a shortage of oil supplies and finally an even greater increase in prices, Novak warned.

MOSCOW, Dec. 6 (Xinhua) -- Russia does not exclude the possibility of moderately reducing its oil production given the "uncertain situation" caused by the decision of the European Union (EU) and the Group of Seven (G7) to cap the price of Russian crude, a senior official said Tuesday.

"Russian oil is in demand on world markets and will find its buyers ... Yes, logistics mechanisms and chains will change now. Nevertheless, we do not see any tragedy here," Deputy Prime Minister Alexander Novak, who is in charge of Russia's energy affairs, told reporters.

Moscow does not accept the price limit imposed in an artificial and non-market way, which can only lead to a global decline in investment, a shortage of oil supplies and finally an even greater increase in prices, Novak warned.

"The environment is more challenging, but we will continue to sell oil using new insurance mechanisms, new ways of cooperation between companies, and new means of transportation," he said.

EU member states agreed last week on a 60 U.S. dollar per barrel cap on the price of Russian seaborne crude. Insurance, finance and other services for Russian oil shipments will be banned if the fuel sells for a higher price than the limit.

In September, finance ministers of G7 countries agreed to impose a price cap on Russian oil.