The President of Russia, Vladimir Putinfinally revealed his country’s long-awaited response to the ceiling price for oil decreed by the West, signing a decree that prohibits exports of crude oil and its derivatives to those countries that apply said limit, for five months and from next February 1.
The G-7the European Union Y Australia agreed to impose a maximum price of 60 dollars per barrel on Russian oil transported by sea from December 5 in retaliation for his “special military operation” in Ukraine. This figure is around the current price for which Kremlin crude is sold, but it remains far below of the unexpected price for which Russia was able to sell its oil this year and thanks to which it was able to initially offset the impact of the financial sanctions decreed against Moscow.
Second largest exporter
Russia It is the world’s second largest exporter of crude oil. after Saudi Arabiaand a significant drop in sales would have higher order consequences for him world supply from this power source. The decree, posted on the Kremlin website and on a government website, has been presented as “a direct response” to actions that are unfriendly and contrary to international law carried out by USA, foreign states and international organizations that have joined them.
“deliveries of petroleum and petroleum derivatives to foreign entities are prohibited, in the event that in the contracts for these exports, directly or indirectly, they contemplate the mechanism to set the maximum price”, reads the legal text. “This established prohibition applies to all stages from export to the final consumer,” he continues. The ban on the sale of oil will come into force February 1although the veto on the sale of crude oil derivatives must wait for the decision of the Russian Government and may be effective after said date.
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The cap on the price of oil, a measure not seen even in times of the Cold War, is intended to deplete Russian state coffers and Russian military efforts in Ukraine. Analysts have assured that the measure will have a limited impact in the income that Moscow is currently earning. Despite this, the Finance Minister, Anton Siluanovhas admitted that the fiscal deficit could exceed in 2023 2% forecastan added fiscal hurdle for a country that is spending a lot of money on its military campaign in Ukraine.
With the start of the war, Moscow has redirected its crude exports towards Asia, more specifically towards China and India.