image source,Archyde.com
Russia ordered a ban on the sale of oil to countries and companies that impose price caps on Russian oil exports.
Earlier this month, Western countries including the Group of Seven (G7), Australia and the European Union reached an agreement to set a price ceiling for oil exports to Russia, which will take effect from December 5.
The price cap sets countries at no more than $60 (€56; £50) a barrel for buying Russian oil exports.
Now, Russia says it will no longer sell its oil and oil products to any country or company that imposes price caps.
The ban, issued by presidential decree, will last for five months, from February 1 to July 1.
The presidential decree also said that Russian President Vladimir Putin may grant “special permission”.
The Group of Seven, a group of developed economies, initially proposed capping oil prices in September as a way to prevent Moscow from using oil profits to finance its war on Ukraine.
Although Western demand for Russian oil exports fell following Russia invaded Ukraine, Russia’s oil profits remained high due to rising oil prices and rising demand from places like India and China.
Earlier BBC research found China and India were the biggest importers of Russian oil at a time when many Western countries were imposing sanctions on Russia.
The European Union has already implemented a ban on Russian seaborne crude oil, and many countries such as the United Kingdom and the United States have made similar commitments.
The oil price cap is intended to further reduce Russia’s oil export profits. It bans the use of G7 and EU tankers, insurance companies or credit institutions for Russian crude oil priced above $60 a barrel.
Many large international shipping and insurance companies are headquartered in G7 countries.
However, earlier this month, Ukrainian President Volodymyr Zelensky called the oil price cap a “weak” solution that was not “draconian” enough to hit the Russian economy.
Russia’s budget deficit in 2023 might be larger than expected by 2 percent as oil price caps squeeze export profits, Finance Minister Anton Siluanov said on Tuesday (Dec 27).
Oil is currently trading at around $80 a barrel, well below the peaks of more than $120 a barrel in March and June.