1672191081 origin 1

Russia bans oil sales to countries using a price cap, including the EU, G7 and Australia

origin 1Russia will stop exporting oil to countries using the price cap from February 2023 ©AFP

From February 1, Russia will completely ban the sale of oil to countries that have introduced caps on its exports.

The ceiling of $60 (€56) was agreed in early December by the EU, the G7 group of nations and Australia.

On December 27, Russian President Vladimir Putin signed a decree that read: “The delivery of Russian oil and petroleum products to foreign legal entities and other individuals is prohibited” if those countries use the price cap.

The decree specifies that this measure is envisaged for a period of five months, “until 1 July 2023”.

Only “a special decision” by Vladimir Putin himself can allow the delivery of Russian oil to one or more countries that have implemented price caps in recent weeks, the decree indicates.

In early December, the 27 member states of the European Union, the G7 countries and Australia agreed, after months of negotiations, on a ceiling on the price of Russian oil for export.

Indeed, only oil sold by Russia at a price of $60 or less can continue to be delivered. Beyond this ceiling, companies are prohibited from providing services that allow them to be transported by sea (freight, insurance, etc.).

The goal of this measure is to deprive Moscow of significant revenues to finance its military intervention in Ukraine.

However, the price of a barrel of Russian oil is currently hovering around $65, just above the ceiling, indicating little short-term impact of this measure, according to many observers.

Ukrainian President Volodymyr Zelensky had deplored “a weak position” of his Western allies upon his establishment.

For their part, the Russian leaders had declared on several occasions that they “did not accept” this mechanism which “will have no impact” on the progress of the Russian offensive against the Ukrainian neighbour.

On December 9, Vladimir Putin had threatened the West to “reduce production” of Russian oil “if necessary”, later scolding a “stupid decision”.

Russia is the world’s second largest exporter of oil and was, in 2021, the second most requested supplier of European Union countries. According to European leaders, 90% of Russian oil exports to the EU will already be stopped by the end of 2022 in protest against the Russian offensive in Ukraine.