Monitoring Desk
ISLAMABAD/NEW YORK: Russia banned oil sales to countries and companies that comply with a price cap agreed by Western nations, briefly helping to lift crude prices on Tuesday.
A presidential decree said that supplying Russian oil and oil products to foreign legal entities and individuals is prohibited if the contracts for these supplies indirectly or directly use a price cap.
The decree could be in effect from February 1 until July 1.
It added that a ban might be lifted in individual cases based on a “special decision” from Vladimir Putin, Russian President.
Oil prices jumped
A price ceiling of $60 per barrel was agreed upon by European Union, G7, and Australia in early December. It sought to restrict Russia’s revenue while ensuring Moscow supplies the international market.
Oil prices have jumped on the announcement, and analysts pointed to expectations for stronger demand due to the reopening actions by China after lengthy Covid-19 restrictions in the country.
But most of gains in oil prices have evaporated by the end of the trading session. Analysts have noted that the Moscow’s move could not impede deliveries to China, India, and other importers that did not join the price cap.
Matt Smith of Kpler said that the Russian action “could not come as much as a surprise for the market, given what we heard from them over the recent months,”.
“It’ll tighten things up, but has not too much.”
Brent oil futures for the delivery in February ended up 0.5 per cent at $84.33 the barrel.
US benchmark West Texas Intermediate for the delivery in February slipped less than 0.1 per cent to $79.53 barrel.
Introduced alongside the EU embargo on seaborne deliveries of Russian crude oil, the cap aims to ensure Russia cannot bypass the blockade by a selling its oil the third countries at high prices.
