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MOSCOW: Russia, the world’s biggest exporter of energy, could cut oil production and will refuse to sell oil to any country that imposes the West’s “stupid” price cap on Russian oil, President Vladimir Putin said on Friday.

The Group of Seven major powers, the European Union and Australia last week agreed to a $60 per barrel price cap on Russian seaborne crude oil after EU members overcame resistance from Poland. “As for our reaction, I have already said that we simply will not sell to those countries that make such decisions,” Putin told reporters in the Kyrgyz capital, Bishkek.

“We will think, maybe, even about a possible, if necessary ... reduction in production.”

Putin, who rules the world’s second largest oil exporter after Saudi Arabia and the largest gas exporter, said Russia had a production agreement with other members of the OPEC+ oil producers’ club, so such a drastic step was still only a possibility.

“We are thinking about this, there are no solutions yet. And concrete steps will be outlined in a decree from the president of Russia that will be released in the next few days,” Putin said.

Selling oil and gas to Europe has been one of the main sources of Russia’s foreign currency earnings since Soviet geologists found oil and gas in the swamps of Siberia in the decades after World War Two.

Russia: price cap is ‘dangerous’ and will not curb demand for our oil

White House spokesman John Kirby said Putin’s threat was not unexpected but that it remains to be seen what action Moscow ultimately takes, telling reporters in a news briefing: “We’re not surprised by those comments. It’s actually not really new.”

Putin dismissed the West’s attempt to squeeze Russian finances, saying the $60 price cap corresponded to the price at which Russia was selling oil.

“It all boils down to about this figure,” Putin said. “So don’t worry about the budget.”

The price for Urals blend crude on Friday was around $53 per barrel, according to Reuters data.

The Kremlin chief cautioned that attempts by the West to impose a price cap would lead to the global collapse of the oil industry and then a catastrophic rise in prices.

“This will lead to the collapse of the industry itself, because the consumer will always insist that the price be lower. The industry is already under-invested, under-funded, and if we listen only to consumers, then this investment will be reduced to zero,” Putin said.

“All this will lead at some stage to a catastrophic surge in prices and to the collapse of the global energy sector. This is a stupid proposal, ill-conceived and poorly thought-out.”

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