Putin Prohibits Selling Russian Oil to Price Cap Participants

Most Western countries that pushed the price cap already banned the import of Russian oil

Russian President Vladimir Putin on Tuesday signed a decree banning the sale of oil to countries participating in the Western-imposed price cap on Russian crude that was pushed by the US and its G7 partners.

Putin’s ban will take effect on February 1 and last through July 1, 2023. It’s not yet clear what impact his retaliation will have on the global market, as many Western countries that favor the cap have already stopped importing Russian oil.

But Russian officials still expect Russia’s oil production to be reduced somewhat in 2023. According to Bloomberg, Russian Deputy Prime Minister Alexander Novak said Russia’s oil output may fall by 500,000 – 700,000 barrels per day in early 2023.

Last month, Russia averaged 10.9 million BPD, the highest level in eight months, as Western sanctions have failed to curtail Russian energy profits.

The decree signed by Putin said that it applies to “supply contracts that directly or indirectly use the mechanism of setting a price cap.” The EU set the cap at $60 per barrel, and Western insurance companies are banned from providing insurance for shipments of Russian oil that exceed that price.

The US, Britain, and most EU countries have all banned the import of Russian oil. Some landlocked EU countries that rely on Russian oil shipped through pipelines have exemptions, including Hungary and Slovakia, but the price cap only applies to seaborne oil.

Japan is still importing some Russian oil and is participating in the cap, but Tokyo has an exemption for crude sourced from the Sakhalin-2 plant, an oil and gas project in eastern Russia that Japanese energy companies are involved with.

Author: Dave DeCamp

Dave DeCamp is the news editor of Antiwar.com, follow him on Twitter @decampdave.