Vladimir Putin bans the sale of oil and oil products to countries that have imposed a price cap on oil from Russia.
The ban also applies to any trader who cooperates with the maximum price that Western countries have set, according to a decree signed by the Russian president on Tuesday.
The crude oil ban will take effect on February 1 and will remain in effect at least until July. For processed oil products, such as diesel or petrol, the Russian government has yet to determine when the ban will take effect. A special clause gives Putin the option to override the ban in special cases.
Price cap
Earlier this month, the European Union, G7 countries and Australia imposed a price cap on Russian oil to limit oil revenues for the Kremlin. This was to ensure that the country had less money to spend before the invasion of Ukraine, but that it would not immediately stop all oil exports, causing a huge price increase.
The Western measure means that only oil that is sold at a price of USD 60 per barrel or less can be delivered. If Russian oil is traded for a higher price, Western companies such as shipping companies and insurers are not allowed to participate in its transport.
The EU, the US, the UK and some allies have already partially or completely banned Russian oil themselves because of the invasion of Ukraine. But other countries, such as India and China, have never formally condemned the attack on Ukraine and import a lot of Russian oil. In theory, it would also be impossible for Russian oil exports to those countries to escape the sanction, because almost all insurers for shipping freight come from the G7 countries, for example.
Question marks
Some energy industry analysts have questioned the effect of the Western price cap, as the price of $60 a barrel is already close to what importers are now paying for deeply discounted Russian oil. Russian Finance Minister Anton Siluanov said earlier on Tuesday that the price cap could cause a larger budget deficit than the planned 2 percent next year.
Global oil prices rose slightly on Tuesday night. Brent oil, indicative of the prices for oil from Europe, Africa and the Middle East, became 1.5 percent more expensive at around 6:30 p.m. at more than USD 85 per barrel.