Starting February 1, Russia will ban the sale of its oil to foreign countries that use the ceiling on the price of Russian black gold, set in early December at 60 dollars a barrel by the EU, G7 and Australia.
This maximum price had been set at the beginning of December at 60 dollars a barrel by the EU, the G7 and Australia; and aims to deprive Moscow of significant revenues to finance its military intervention in Ukraine.
“The delivery of Russian oil and petroleum products to foreign legal entities and other individuals is prohibited” if they use the price cap, reads a decree signed by Russian President Vladimir Putin on Tuesday.
The decree specifies that this measure is envisaged for a period of five months, “until 1 July 2023”.
Only “a special decision” by Vladimir Putin himself will be able to allow the delivery of Russian oil to one or more countries that have set the maximum price ceiling in recent weeks, according to the decree published on Tuesday.
In early December, the 27 member states of the European Union, the G7 countries and Australia had agreed, after months of negotiations, to cap the price of Russian oil for export at 60 dollars a barrel.
Indeed, only oil sold by Russia at a price of $60 or less can continue to be delivered. Beyond this limit, companies are prohibited from providing services that allow them to be transported by sea (freight, insurance, etc.).
On Tuesday, faced with this decision from Moscow, the price of black gold, already at a three-week high, rose for the first time, but the rise was short-lived.
Finally, the price of a barrel of North Sea Brent Brent for delivery in February rose modestly by 0.48% to $84.33.
As for the barrel of American West Texas Intermediate (WTI), also maturing in February, it lost 0.03% to 79.53 dollars.
“There was a very distinct price reaction” to the Russian announcement “but really this decision comes as no surprise to the market,” Kpler’s commodity market analyst Matt Smith told AFP.
“You would expect that, given everything the Russians have already said in recent months and what they have done with natural gas, refusing to sell to Bulgaria and Poland, because these countries don’t pay in rubles,” the analyst added. .
According to him, the application of this ban will have a limited impact, because “the big buyers of Russian crude oil such as India or China do not apply the maximum price” and buy it below 60 dollars a barrel.
“It will narrow the supply a bit, but not that much,” commented Matt Smith.
The price of a barrel of Russian oil (Ural crude) currently hovers around $65, just above the set cap, implying little short-term impact of this cap size, according to many observers.
Ukrainian President Volodymyr Zelensky thus deplored “a weak position” of his Western allies at the time of its establishment.
For their part, the Russian leaders had declared on several occasions that they “did not accept” this mechanism which “will have no impact” on the progress of the Russian offensive against the Ukrainian neighbour.
On December 9, Vladimir Putin threatened the West to “reduce production” of Russian oil “if necessary”, later criticizing a “stupid decision”.
Russia is the second largest oil exporter in the world and was, in 2021, the second largest supplier of black gold to European Union countries. According to European leaders, 90% of Russian oil exports to the EU will already be stopped by the end of 2022 in protest against the Russian offensive in Ukraine.
