Putin signs decree banning sales of oil to price cap abiding states

By Al Mayadeen English
Source: Agencies
1 Feb 2023 15:00
2 Shares

The ban on petroleum products will be announced by government ministers later this year.

Russian President Vladimir Putin holds a video-linked meeting with the Vologda regional governor at the Novo-Ogaryovo state residence, outside Moscow, on Monday, Jan. 30, 2023. (AFP)

In retaliation to the Russian oil price cap, Russian sources reported on Wednesday that President Vladimir Putin signed a decree to ban the sales of crude oil to countries abiding by the Western-led price cap on Russian oil.

The decree takes effect today on February 1st and expires on July 1, and will ban countries and businesses alike that comply with the G7 price cap.

On December 5, 2022, EU states agreed to cap Russian oil at $60 per barrel and review the price every two months for the price to remain 5% below the International Energy Agency benchmark.

On the same day, OPEC+ member states voted to cut down on their production of oil and agreed to reduce their oil production by 2 million barrels a day.

On December 19, 2022, Kremlin Spokesperson Dmitry Peskov said the attempt to control gas prices is unacceptable, stressing that Moscow will make the proper decision, as it did with the regulation on oil.

“The principles are the same here. This is a violation of the market pricing, an attack on it. Any references to a price cap are unacceptable. It will take time to carefully assess the pros and cons. The oil process dragged on a little," Peskov told journalists.

Peskov asserts that Moscow's response to the ceiling on gas pricing would be the same as it was when Russian oil was subject to sanctions.

Regarding market pricing, Putin said on December 22, "You know, this is a slightly different regulation than an attempt to regulate oil prices. Here, the European Commission talked more about the need to regulate the situation on the stock exchange, linking it to LNG, saying that prices should be correlated with LNG prices and so on, but still it is an attempt to administratively regulate prices."

On December 29, 2022, Russian Finance Minister Anton Siluanov said that "Russia is one of the largest oil exporters and it will always be," noting that Russia remains the number one supplier of crude oil despite the price cap.

"Prices will be established on the basis of market principles, and not on the basis of any ceilings or restrictions that cannot work within the context of market pricing," he said.

On January 19, Bloomberg revealed that the US is hesitant to approve a lower price cap on Russian oil, despite some EU countries urging for directing further cuts to Russia's energy profits.

According to the report, Washington will review the price cap on Russia's crude oil only after the G7 adopts price caps on Russian oil derivatives, such as diesel.