January 27, 2023

Athens News

News in English from Greece

Putin announced a ban on oil exports to countries that have adopted price restrictions

A decree banning the export of oil and its derivatives to those countries that have adopted a restriction on its price was signed today by Russian President Vladimir Putin.

This measure, according to the decree in question, will be valid from February 1 to July 1, 2023 and is Putin’s first high-profile response to the $60 per barrel cap imposed by the G7 countries, the European Union and Australia. The relevant document is published on portal legal information of the Russian Federation.

The sale of “black gold” to countries that supported the price ceiling remains possible in exceptional cases. The President retained the right to issue special permits for the export of oil.

It is worth noting that after the news of the signing of the decree by Vladimir Putin, the prices for WTI and Brent oil rose significantly.

On December 9, the Russian president called the restriction “stupid”, saying that the ceiling of $60 per barrel was in line with the price at which Russia already selling oil. What’s more, Moscow said last week that the imposition of the cap could lead it to decide to cut oil production by 5-7% early next year. Russia’s budget deficit in 2023 could be larger than the projected 2% of GDP as the marginal price of Russian oil is expected to cut export earnings, declared former Minister of Finance of the country Anton Siluanov.

The draft cap would ban the transportation of Russian oil by sea and the services necessary for it, such as brokerage, financial assistance and insurance, if the cargo is purchased above the agreed price limit. Most G7 countries will stop importing Russian oil by the end of the year. Similar restrictions, including price ceilings, on other petroleum products are expected to be introduced in February next year.

The restriction was introduced on December 5 by the G7 countries, the European Union and Australia to put pressure on Moscow to finance the war. It is worth noting that India, China and some Asian countries, which today consume the lion’s share of Russian exports of “black gold”, did not join the measures.

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