Russia says it's making good on its vow not to sell any oil under a price cap imposed by Western nations. Vladimir Putin signed a decree Monday stating that no oil will be sold to the Group of Seven nations, the European Union, and other allied nations between Feb. 1 and July 1, the New York Times reports. The G7 and the EU agreed in early December to impose a $60 per barrel cap on the price of Russian oil and oil products as a way to reduce the funds available to Moscow for its war in Ukraine without massively disrupting world oil markets. The plans also bans shipping and insurance companies from dealing with cargoes of Russian oil if they are being sold for more than the price cap.
"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," Putin's decree states, per Reuters. It's not clear how much impact Russia's move will have, since most EU countries have already banned the import of Russian oil, although global price could go up if Russia also curbs exports to non-Western buyers. The price cap is close to the current price of Russian crude oil and analysts say that while it might not have much effect on current Russian oil revenues, it will stop Moscow reaping huge gains if the oil price surges again as it did earlier this year
The decree also contains a loophole big enough to steer oil tankers through: It states that Putin can, at his discretion, create exemptions to sell oil to countries following the price cap. "The decree is vague and provides Putin with options to keep exports going to selected countries complying with the cap,” Simone Tagliapietra at the Bruegel think tank in Brussels tells the Wall Street Journal. "All in all, this is a sign that Russia is in a vulnerable situation, needs oil revenues and therefore cannot take drastic retaliation measures." (More Russia stories.)
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