Putin Signs Decree Banning Russian Oil Exports To Countries That Impose Price Cap

Russian President Vladimir Putin

Russian President Vladimir Putin has signed a decree banning the supply of crude oil to foreign companies and citizens that abide by a $60-per-barrel price cap set by Western allies as a means to squeeze Russian revenue used to fund the war in Ukraine.

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The restrictions will take effect on February 1 and remain in effect until July 1, according to the decree signed by Putin on December 27.

The decree applies not only to oil but also to oil products; however, the government will separately determine the date from which sales of those products at the established price ceiling will be prohibited.

The decree, published on a government portal and the Kremlin website, 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 organizations joining them."

It says 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 G7, the European Union, and Australia agreed earlier this month to a $60-per-barrel price cap on Russian seaborne crude oil effective from December 5. The price cap, designed to cut the amount of money Russia has to fund its war in Ukraine, was agreed to back up an EU embargo on seaborne Russian oil that went into effect that day.

It is meant to maintain Russian oil supplies to other buyers on the world market, while reducing Russia's income from oil sales.

After the price cap was announced, Russian Deputy Prime Minister Aleksandr Novak said that Russian authorities would develop measures to refuse oil supplies to countries that implement the price cap.

EU countries negotiated over the price cap for months before reaching agreement just before the embargo went into effect. Poland reportedly had held out for a lower cap, while Ukraine had called for a far lower price cap of $30 per barrel to hit Russia's economy harder.

With reporting by Reuters and dpa