Russian President Vladimir Putin

The price cap on Russian oil, proposed by the West weeks ago, corresponds to the current oil prices, and it does not affect Russia, Russian President Vladimir Putin said on Friday.

"The proposed cap corresponds to the prices at which we sell today. In this sense, this decision does not affect us in any way. To be honest, it is not important for us," Putin said at a press conference following his visit to Kyrgyzstan.

He further underlined that Russia will not incur any losses in the wake of the price cap being introduced under no circumstances, further highlighting that Moscow would not be selling oil to unfriendly countries imposing price caps on it.

Additionally, the Russian leader stressed that the authorities in Moscow would take specific steps to allow the country to respond to the oil price cap and that the steps in question would be outlined in a decree that will be coming out in the coming days.

The West has long been looking to reduce Russia's income from oil and gas - namely since the outbreak of the Ukraine war, with the latest measure being a price cap on Russian oil.

In October, the EU introduced the eighth package of sanctions against Moscow, which included a legislative basis for setting a price cap for maritime shipments of Russian oil to third countries.

Starting from February 5, 2023, the European Union will be introducing a price cap for Russian refined products as well.

The European Union reached an agreement on setting a price cap on Russian oil at $60 a barrel, keeping a review mechanism to keep the price cap at 5% under market value.

Kremlin spokesperson Dmitry Peskov said in response that the price cap that was imposed on Russian oil abroad is unacceptable for Russia, but Moscow will be analyzing it and deciding how to operate under the new circumstances.

Moscow was anticipating the price cap and is now analyzing the situation, the spokesman underlined.

In light of that, Ukraine suggested on Saturday that the price cap should have been set lower than $60, as it is "insufficient" to penalize Russia. The $60 price cap imposed is not "serious", Ukrainian President Volodymyr Zelensky said Saturday, explaining that the decision was "quite comfortable" for Moscow.

To further tighten its grip on Moscow, Brussels announced that "if a third country flagged vessel intentionally carries Russian oil above the price cap, EU operators will be prohibited from insuring, financing, and servicing this vessel for the transport of Russian oil or petroleum products for 90 days after the cargo purchased above the price cap has been unloaded."

Russia has pledged to stop supplying oil and gas to countries that impose price ceilings. Russia's Permanent Representative to International Organizations in Vienna, Mikhail Ulyanov, declared last Wednesday that the European Union will have to live without Russian oil starting this year as a repercussion of the price cap imposed on the country's oil.

He also recalled how Moscow had made it clear that it will supply oil to the countries that supported the price cap that he described as "anti-market".

Economic decline

The Russian President noted that the economy in Russia was not at its best, saying there was economic decline, though he did say the situation there was better than it was in many other countries.

"When we have predicted a 20% economic decline in Russia, there is a downturn, but 2.9% is, of course, a big difference. And we understand that those who predicted such a development of events were greatly mistaken. And we were right," he said.

"It is probably impossible to say that we are doing very well because there is a recession, but the situation is much better than in many other countries in a number of ways," Putin added.

Touching on inflation in Russia and among the west, he highlighted how the inflation in Europe was at a transcendent level, touching the 20% threshold in certain areas, while it did not go over 12% in Russia.

Merkel words about Minsk agreements disappointing

The statement made by former German Chancellor Angela Merkel said about the Minsk agreements being concluded only to give Ukraine time to prepare for war with Russia was unexpected and disappointing, Putin said.

Merkel told earlier the German Die Zeit newspaper in an interview that the Minsk agreement reached in 2014 "was an attempt to give Ukraine extra time."

She underlined that she doubted NATO countries could have done as much as then as they were doing now to help Ukraine.

"Honestly, this was completely unexpected for me. This is disappointing. Frankly speaking, I did not expect to hear this from the former Federal Chancellor. I always assumed that the leadership of the Federal Republic is sincere with us," Putin told a press conference, commenting on Merkel's statement.

It is quite understandable that Germany was on Ukraine's side, and supported Ukraine, he noted.

"But it still seemed to me that the leadership of the Federal Republic always sincerely sought a settlement on the principles that we agreed on and that were achieved, including within the framework of the Minsk process," Putin added.

Additionally, Putin continued by highlighting how Merkel's statements caused a question of trust to arise, though he stressed that it would be necessary to agree on the Ukrainian issue anyway.

"Now, of course, the question of trust arises. And so trust, of course, is almost at zero, but after statements of this kind, of course, the question arises: how to negotiate anything? And is it possible to negotiate with anyone? And where are the guarantees? This, of course, is the question," Putin told reporters.

However, he did note that it would be necessary to negotiate eventually, recalling how he said on several occasions that Moscow was ready for the agreements in question. "We are open, but this makes us think, of course, about who we are dealing with."

Merkel's words, according to Putin, only say that "we did everything right from the point of launching a special military operation."

Reports at the time said that Russia obtained intelligence that NATO was planning on deploying four military divisions in Ukraine amid concerns in Mosow about an eastward expansion for the Western alliance.

Russia had for months been warning of the threat posed against it by NATO's attempts to expand eastward, which happened simultaneously with an increase in NATO military activity along Russia's borders, and batches of lethal weapons being sent to Ukraine, prompting Russia to request security guarantees from the West. Washington failed to provide the guarantees.

Russia got its bearings in Ukraine late, hoping to resolve the situation peacefully, Putin underscored.

"Apparently, we got our bearings late, to be honest. Maybe, all this should have started earlier. We just hoped that we would be able to agree within the framework of the Minsk peace agreements. But what can you say to that," he told reporters.