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, seeking to curb Moscow’s ability to fund the Ukraine war, last week agreed on a US$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,” Mr Putin told reporters at a news conference in the Kyrgyzstan capital, Bishkek, after a summit.

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

Mr 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. Opec+ comprises the Organisation of the Petroleum Exporting Countries plus allies including Russia.

“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,” Mr Putin said.

The price cap will not have any negative consequences on Russia’s revenue as the US$60 a barrel threshold introduced by Western countries “corresponds to the prices at which we sell today”, Mr Putin said. “We already sell at about these prices, so don’t worry about the budget.”

Russia’s flagship Urals crude that is exported from the Baltic port of Primorsk was assessed at US$41.59 a barrel on Thursday, according to data from Argus Media, whose figures the Russian government has used to calculate export duties. However, the price of Russia’s ESPO crude blend in Asia is holding well above the Western cap, trading at US$67.11 a barrel on Thursday.

Mr Putin warned: “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.”

On Russia’s “special operation” in Ukraine, he said Moscow would likely have to reach agreements regarding Ukraine in the future, but felt betrayed by the breakdown of the Minsk agreements.

“Trust, of course, is almost at zero... but ultimately, in the end, an agreement will have to be reached. I have said many times that we are ready for these agreements, and we are open” to them, Mr Putin said during the summit of regional leaders in Bishkek.

He said Germany and France – which brokered ceasefire agreements in the Belarusian capital Minsk between Ukraine and Russian-backed separatists in eastern Ukraine in 2014 and 2015 – had betrayed Russia and were now pumping Ukraine with weapons.

In an interview published in Germany’s Zeit magazine on Wednesday, former German chancellor Angela Merkel said that the Minsk agreements had been an attempt to “give Ukraine time” to build up its defences.

Mr Putin said on Friday that he was “disappointed” by Dr Merkel’s comments.

On the battlefront, Russian forces have shelled the entire front line in the Donetsk region in eastern Ukraine, Ukrainian officials said, part of what appears to be the Kremlin’s scaled-back ambition to secure only the bulk of territory it has claimed. The fiercest fighting was near the towns of Bakhmut and Avdiivka.

At the news conference, Mr Putin said further prisoner swops between the United States and Russia were possible, and that contacts between their intelligence services would continue.

His comments came after the US freed Russian arms dealer Viktor Bout in exchange for US basketball player Brittney Griner in the most high-profile prisoner exchange between the two countries in years. REUTERS, AFP, BLOOMBERG