Monitoring Desk
MOSCOW: In a major development, Russian President Vladimir Putin on Tuesday delivered the country’s long-awaited response to a Western countries’ price cap, signing a decree that bans importing oil and oil products to nations participating in the price cap from February 1, 2023, for five months.
The G-7 major powers, Australia, and the European Union agreed this month to a $60-per-barrel price cap on Russian crude oil effective from December 5 over Russia’s “special military operation” in Ukraine.
The Russian decree stated: “This comes into force on February 1, next year, and applies until July 1, 2023.”
Crude oil exports from Russia will be banned from February 1, but the Russian government will determine the date for the ban on oil products, which could most likely be after February 1.
The decree includes a clause that allows Putin to overrule the ban in special cases.
Russian President’s decree in response to price cap
The presidential decree, published on a government portal and the Kremlin website, was presented as a direct reply to “actions that are contradictory and unfriendly to international law by the United States and foreign states and other international organizations joining them to implement the price cap.”
“Supplies of Russian oil and oil products to foreign companies and individuals are banned, on the condition that in the agreements for these supplies. The utilization of a maximum price fixing mechanism is indirectly or directly envisaged,” the decree stated.
The order, which includes a clause that allows President Putin to overrule the ban in special cases, stated: “This…comes into force on February 1, 2023, and applies until July 1, the same year.”
The price cap, unseen even in the Cold War between the Soviet Union and the West, is aimed at crippling Russian state coffers and Russia’s military operation in Ukraine.
Russia’s Finance Minister Anton Siluanov said on Tuesday that the country’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.
