Russia bans oil export for countries who implement price cap

ECONOMICHNA PRAVDA – TUESDAY, 27 DECEMBER 2022

Vladimir Putin, the President of Russia, signed a decree which bans the trade of the Russian oil and oil products if the countries who are buying them include a price cap in the contract.

Source: the decree published on the Russian legal information portal

The decree will come into force on 1 February and will be valid until 1 July 2023. Once the decree comes into force, it will ban the countries implementing the price cap from importing Russian oil. The Russian government will decide on the date when the same ban will be implemented concerning oil products.

"Supplying [oil and oil products – ed.] to legal entities and individuals is prohibited if contracts for these supplies directly or indirectly mention a mechanism of fixating a price cap," the decree says. 

Nevertheless, the Russian Federation has left a way to continue exporting oil to the countries declared "unfriendly"; a special Putin’s decree can allow these supplies to some countries. 

Earlier, it was reported that Moscow could cut oil production to 500,000-700,000 barrels per day in response to G7 countries’ restrictions for the export of Russian oil. Income from oil is a major part of the Russian budget. 

Background: 

• Four days after G7 set limits for it, part of Russian oil was being traded for a price significantly lower that the cap established for Moscow; 
• G7 countries announced that they agreed on establishing "a price cap" for oil exported from the Russian Federation by sea at the level of US$60 per barrel. 

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