Russian President Vladimir Putin signed a decree that tightens Russia’s stance on oil sales to nations enforcing price caps. As of February 1, 2023, Russia prohibits oil exports to countries observing a cap on crude prices.
The response includes a limit of 60 dollars per barrel for Russian crude aimed at the European Union, the G7 and Australia. The measure will stay in place until July, tied to Moscow’s actions in Ukraine.
For refined petroleum products, the timing of any ban will be decided by the Russian government, but not before next February.
The decree instructs that contracts containing direct or indirect price cap provisions will not be honored as a basis for oil supply to individuals or entities.
The ban is described as covering the entire procurement chain from source to final buyer, according to the decree.
The document frames the actions as responses to hostile acts perceived as unlawful by the United States and other foreign governments and organizations.
Officials state that the decree aims to protect Russia’s national interests.
Colonial Atavism
Simultaneously, Putin retains the right to carve out exceptions through a special decision mechanism.
Last week Putin characterized the price cap as colonial patriarchy, while denying that Russia would incur losses from the measure.
He argued that others have grown accustomed to benefiting from oil trade, but that the global economic landscape has changed and will resist past practices more effectively today.
Warning was issued that artificially restricted prices could destabilize the world energy market by reducing investment and purse-supply dynamics, ultimately driving prices higher. Those who push such mechanisms would bear the consequences of their policies.
Earlier statements indicated Russia could cut oil production by five to six percent early next year.
Deputy Prime Minister Alexander Novak told state television that Russia stands ready to partially mitigate impacts and could see a production reduction of about 500,000 to 700,000 barrels per day at the start of the coming year.
(Source: Kremlin official releases) (Source: state media broadcasts) (Source: international energy briefings)