Russia will ban the sale of oil to countries that use price caps

Brussels – There Russia will ban the sale of oil and derivative products to the countries that have decided not to buy Moscow’s crude oil above 60 dollars a barrel, even when the market price is higher. This was established by a decree signed today (December 27) by the Russian president Vladimir Putin in response toagreement on the oil price ceiling reached in early December by the G7 countries (Canada, France, Germany, Japan, Italy, the United Kingdom and the United States of America), the European Union and Australia.

For days now, a response from Moscow to the Western oil price cap had become increasingly probable. “The sale of Russian oil and petroleum products to companies and other private individuals is forbidden” if they make use of the price ceiling, reads the decree, which however provides for the possibility for the Kremlin to grant a permit for the supply of oil to countries covered by the ban. The ban will come into effect on February 1 and will last for five months, until July 1, 2023.

The agreement on the price range beyond which to ban the global transport of Moscow’s crude oil to third countries by sea was signed in the context of the G7, where the seven richest economies in the world agreed together with Australia and the European Union to introduce a global ceiling on the price of Russian oil transported to third countries, with a view to preventing Russia from continuing to profit from the war of aggression in Ukraine and to support the stability of global energy markets. The crude oil price cap came into effect on December 5 for Russian crude, while it will be operational from February 5, 2023 also for refined petroleum products (on which the ‘cap’ level will have to be established at a later time). Even once the roof is fixed to $60 a barrelthe number can be changed at any time, the agreement provides a mechanism of review of the functioning of the price cap every two months.

The global price cap is complementary to the entry into force on December 5 of the embargo on Russian oil decided in the sixth package of sanctions against Moscow adopted in early June, with which the governments of the EU have decided to cut by the end of 2022, 90 percent of Russian oil imports arriving on the European continentthrough an embargo on all oil arriving by sea and a commitment by Germany and Poland to also cut their imports through the Druzhba pipeline. With the current EU embargo on crude oil exports in place, the effect of the Kremlin stoppage will have little or no impact on the European continent: both deliveries by sea and by pipeline have already been reduced to a minimum, there remains only a The exceptions are Hungary, Bulgaria, Slovakia, the Czech Republic and Croatia which continue to receive Russian oil. The European Commission has “seen the press reports on the decree adopted yesterday by the Russian authorities” with which Moscow intends to ban the sale of oil and derivative products to countries that have encouraged the price ceiling for five months starting from February 1 Russian crude oil (European Union, G7 countries and Australia). “Already in June, the EU added a complete ban on the import of all Russian crude and oil products transported by sea”, which covered “90% of the oil imports from Russia that we had at that time”, he explained a spokesman for the Community Executive told Eunews. “The total embargo on imports by the EU has not been affected by the oil price ceiling decided by the G7 in early December.”

The decree signed by Putin on Tuesday in force from February 1 for five months. The measure is in response to the cap on the price of oil sold to third countries established at over 60 dollars per barrel by the European Union, G7 and Australia

Russia will ban the sale of oil to countries that use price caps