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Putin hits back at western sanctions on Russian oil by vowing to deepen trade ties with China and other allies

Vladimir Putin Xi JinpingChina has been a frequent buyer of discounted Russian oil since the war in Ukraine began earlier this year.

ALEXEI DRUZHININ/Getty Images

  • Russia will deepen trade ties with China and other allies, Putin said in a televised speech on Thursday.
  • That comes shortly after the EU banned seaborne energy imports and slapped a $60 price cap on Russian crude. 
  • Putin has called the price cap “stupid,” and previously threatened to retaliate against any country who participate.

Russian President Vladimir Putin hit back at western sanctions by vowing to deepen Russia’s trade ties with allies, including China, a big oil and natural gas customer since the invasion of Ukraine.

“Let me remind you that by introducing sanctions, Western countries were trying to push Russia to the periphery of world development. But we will never take the route of self-isolation,” Putin said in a televised speech on Thursday, per Reuters’ report. “On the contrary, we are broadening, and will broaden cooperation with all who have an interest in that,” he added.

That includes measures like ramping up natural gas sales to China and other Asian countries, creating a natural gas trading hub in Turkey, and setting the price for natural gas sales to Europe. Putin’s remarks come shortly after European Union banned seaborne imports of Russian crude and slapped a $60 price cap on oil earlier this month.

Already, the limitations have caused Russian crude exports to nosedive – spelling trouble for the nation’s economy, as crude oil is one of Moscow’s biggest money-makers. 90% of its supplies have been redirected to Asia, but at even steeper discounts, with oil regularly being sold below the level of the price cap, traders familiar with the matter told Reuters.

Putin has rebuffed the oil price cap as “stupid,” and threatened to retaliate by refusing to sell Russia’s supplies to participating countries. But cutting itself off from western markets could wither Russia’s economy long-term, economists say, with Russia’s central bank warning that the latest round of sanctions were already “economic shocks” to the nation. National GDP is expected to shrink 2.5% this year, Putin said, though the International Monetary Fund estimates a contraction of 3.4%. 

Still, the Russian president emphasized the country’s resilience, adding that pensions and minimum wage would rise despite heavy military spending as the war in Ukraine approaches the one year mark. 

“Despite the objective difficulties of the current year, we will achieve positive results in reducing poverty, and next year we need to reinforce this positive dynamic,” Putin said.

Read the original article on Business Insider