Putin has finally delivered Russia’s response to a western price cap, signing a decree that bans the supply of crude oil and oil products to nations that impose the cap, reports The Guardian.
The ban will come into effect on 1 February and last for five months, according to the decree published on Tuesday on a government portal and the Kremlin website.
In early December, the G7, the European Union and Australia agreed to a $60-per-barrel price cap on Russian seaborne crude oil in light of of Moscow’s „special military operation” in Ukraine.
The Russian decree was presented as a direct response to „actions that are unfriendly and contradictory to international law by the United States and foreign states and international organisations joining them”.
„Deliveries of Russian oil and oil products to foreign entities and individuals are banned, on the condition that in the contracts for these supplies, the use of a maximum price fixing mechanism is directly or indirectly envisaged”, the decree stated, referring specifically to the United States and other foreign states that have imposed the price cap.
Crude oil exports will be banned from 1 February, but the date for the oil products ban will be determined by the Russian government and could be later.
The price cap, unseen even in the cold war between the west and the Soviet Union, is aimed at crippling Russian state coffers and Moscow’s military efforts in Ukraine.
The finance minister, Anton Siluanov, said on Tuesday that Russia’s budget deficit could be wider than the planned 2% of GDP in 2023, with the oil price cap squeezing export income, an extra fiscal hurdle for Moscow as it spends heavily on its military campaign in Ukraine.
Russia has been promising to respond officially for weeks, and the eventual decree largely established what officials had already said publicly.
The G7 price cap allows non-EU countries to continue importing seaborne Russian crude oil, but it will prohibit shipping, insurance and reinsurance companies from handling cargoes of Russian crude around the globe, unless it is being sold for less than the price cap.
EU countries have separately implemented an embargo that prohibits them from purchasing seaborne Russian oil.