According to a decree from Russian President Vladimir Putin published on the Kremlin website Tuesday, Russia will ban oil sales to countries following the price cap that took effect earlier this month. The ban is set to take effect from Feb. 1-July 1, 2023.
A separate ban on sales of refined oil products such as gasoline and diesel would take effect on a date to be set by Russia’s government, according to the decree. Tuesday’s moves serve as Russia’s long-awaited response to what President Putin is now calling “actions that are unfriendly and contradictory to international law by the United States and foreign states and international organizations joining them”.
“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 said in the decree.
The price cap took effect Dec. 5. Under the cap, oil traders must promise not to pay above $60 per barrel for Russian seaborne oil in order to retain access to Western financing for crucial aspects of global shipping, like insurance.
Tuesday’s decree came just days after Russian Deputy Prime Minister Alexander Novack said Russia was ready for a reduction in oil output in 2023. Novak estimated the reduction could be between 500,000 to 700,000 barrels per day, which is about 5-7% of the overall volume.
“Of course, the goal of our geopolitical opponents and adversaries is understandable – to limit the revenues of the Russian budget. But the thing is, we do not lose anything from this cap,” Putin said at a news conference last week. “There are no losses for the Russian fuel and energy complex and for the budget and economy. There are no losses, because we sell at these prices.”
Reuters contributed to this report.