Russia announced on Tuesday that it will ban the export of its oil to countries that have capped the price of Russian crude, starting next February.
The decision came as part of a decree signed by Russian President Vladimir Putin on Tuesday banning the supply of oil and petroleum products to countries that have capped Russian crude prices.
According to the decree, “the decision will enter into force on 1 February 2023 and will last for five months, until 1 July”.
The decree, which was posted on a government online portal and on the Kremlin website, was presented as a direct response to “actions hostile to and contrary to international law by the United States, foreign countries and international organizations ad they affiliated”.
The decree stipulated that “the delivery of Russian oil and petroleum products to foreign individuals and individuals is prohibited unless the contracts for such supplies provide for the use of the mechanism for fixing maximum prices, directly or indirectly.”
The decree specifically referred to the United States and other foreign countries that impose price caps.
Putin said last week he intended to sign a decree relating to Russia’s response to a price ceiling imposed by the Group of Seven major industrialized nations, the European Union and Australia on December 5, of $60 a barrel.
Russia’s Finance Minister Anton Silyanov said the budget deficit in his country could exceed the projected two percent of GDP in 2023 as the price ceiling imposed on crude oil puts pressure on Russia’s export earnings, which poses a new financial obstacle ahead of Moscow, which is spending lavishly on its military campaign in Ukraine.
The phase of capping low oil prices aims to prevent the world from suddenly losing Russian oil, which could lead to a renewed increase in energy prices.
The New York Times reported that the law is not aimed at preventing the sale of Russian oil, but rather seeks to allow Russia to continue selling oil, but with less financial return.
According to the newspaper, “Doing so would greatly affect global supply and push prices higher at a time when global inflation is already on the rise. It would also hit countries like India and Turkey – the main buyers of crude oil.” Russian – whose support the West hopes to use to keep up the pressure.” Moscow, according to the newspaper report.
However, the newspaper said, “The price of a barrel of $60 represents a disappointment for some European countries, including more aggressive pro-Ukrainian countries like Poland, which wanted to see the Kremlin lose much more revenue from its oil sales.”
And with Russian oil production costs estimated at around $20 a barrel – and the price of Russian oil has traded between $60 and $100 a barrel for the past three years – the agreed price still allows Moscow to reap significant profits. , according to the newspaper.
While the American analyst, Michael Burnett, said in an interview with Al-Hurra that “Putin knows he has influence over Europe because of Europe’s energy needs”.
Burnett believed China was continuing to keep Putin in the game by buying Russian oil and gas, adding, “As long as China plays this role without consequences, Putin will continue to reduce the impact of Europe’s actions,” he said.
Foreign Policy magazine said observers believe India, China, Turkey and many other countries will never agree to a price cap – and that a non-global oil price cap will never work – but nevertheless the magazine said the The non-participating countries’ goal is to get the lowest price to buy oil and that maximum price will give them additional leverage in their negotiations with Russia.
