Vladimir Putin signs decree banning Russian crude oil exports to countries that imposed price cap

Russia’s President Putin made a statement that oil exports will not be traded internationally to those countries that follow the price cap model on Tuesday. This ordinance will come into effect from February 1 to July 1, 2023, to all those price c...

By ET Spotlight Special | Dec 29, 2022, 12.25 AM IST

Russia’s President Vladimir Putin passed a proclamation on oil exports on Tuesday. He said, countries who abide by the price cap model, are restrained from receiving any of the oil products from February 1 onwards, effective immediately, till July 1, 2023.

Germany, which is mostly dependent on Russia for exports, paid no heed to the oil ban ordinance. An economy ministry spokeswoman commented on Germany’s ignorance towards the oil issue saying that they are making themselves ready for this situation from summer.

The G7 countries (Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States), the EU and Australia decided to keep the per barrel price cap to $60 on Russia’s seaborne crude oil, starting from December 5 onwards.

Saudi Arabia is the largest oil exporter in the world while Russia takes the second spot. Now, an official embargo like this, especially on oil products, will only lead to unwelcoming ramifications between the nations.

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The decree by Russia further said that any price cap on oil and oil products deliveries, directly or indirectly, to other nations or individuals, are simply banned without hesitation. This order remains in place till the end buyer. The nations that have the upper hand in this situation are India and China, as they are considered to be the key buyers of Russian oil.

So far, the ordinance is only on crude oil exports. The prohibition date on other oil products will be announced very soon. Looking at the big picture, a ban on oil exports will only make things worse for Russia, as most of the revenues are being splurged into Moscow’s war.

Russia might also be witnessing a crippled economy if swift action is not taken at this hour. The non-EU countries have no sanctions or ban on purchasing oil from Russia, as long as they have a set-up for shipping, insurance and financing. The Russian Urals oil traded beyond $56 per barrel, which is less than the price cap, as of Tuesday.

FAQs:

When is Russia going to prohibit crude oil to foreign nations?
1st February, 2023
Does the crude oil ban by Russia apply to non-EU countries?
No

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