As of February 1, Russia will no longer sell Russian oil to countries that apply the price cap agreed by the European Union, the G7 and Australia at the beginning of December. This is stated in a decree signed by Russian President Vladimir Putin. The ban on crude oil exports will take effect on February 1 and will last at least until July.
LOOK. How much exactly did we pay for Russian gas in recent years? Paul D’Hoore explains
The ban applies to all “contracts that directly or indirectly make use of the price cap” and “at all stages of export up to and including the final buyer”, the decree says. The ban on the export of derivative oil products will come into effect at a later date to be determined by the Russian government.
With the price cap, the West wants to force Moscow to sell its oil to third countries at a maximum price of USD 60 per barrel. If those countries do pay more, companies in the EU, the G7 – the seven richest industrial countries – and Australia will no longer be allowed to provide services that make oil transport possible. This concerns sea transport or the trading and insurance of the cargo.
LOOK. The EU, G7 and Australia reached an agreement on a price cap for Russian oil in early December:
Impact remains limited
Most of the Western countries have stopped importing Russian oil because of the Russian invasion of Ukraine. The impact of the measure is therefore quite limited. In addition, Russian oil is currently sold for about $60. The impact of the price cap will therefore remain limited for the time being. The West wants to evaluate the amount every two months.
Russia has already threatened to cut crude oil production by 500,000 to 700,000 barrels per day next year. Those statements pushed oil prices up further last week. The country produced an average of 10.9 million barrels of oil per day last month, according to information that the financial news agency ‘Bloomberg’ could view. This means production is at its highest level in eight months.
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