Russia bans the sale of Russian oil to countries that impose a price cap

On Tuesday, December 27, Russian President Vladimir Putin signed a decree that would ban the sale of crude oil and oil products to nations that abide by the G7 price cap.

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The ban on the sale of crude oil and oil products to countries imposing a price cap on Russian products will go into effect on February 1, 2023, and last for five months. 

Previously this month, the G7 along with the EU and Australia agreed to a $60 per barrel price cap on Russian seaborne crude oil starting on December 5, 2022, as retaliation for the ongoing conflict between Russia and Ukraine.

Currently, Russia is the second largest oil exporter in the world right behind Saudi Arabia.

On the Kremlin’s website, the government states, “This Executive Order was signed in response to the unfriendly actions taken by the United States, other foreign states and international organisations that sided with them, to establish a price cap on Russian oil and oil products, which is in violation of international law.”

“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,”.

The decree adds that “The established ban applies to all stages of supply up to the end buyer.”

However, the Kremlin says that “Russian oil and oil product sales, that are banned by the Executive Order, may be carried out under a special decision of the President of the Russian Federation.”

The decree is set to end on July 1, 2023.

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