Russia to ban oil sales to companies that comply with EU's price cap

Russia on Tuesday published a decree that bans oil sales to countries and companies that comply with Europe's price cap coordinated by the ally Western countries in response to its military invasion of Ukraine. The decree will take effect from Feb. 1 until July 1. According to the published document by Kremlin, Russia may ease the restriction basis a "special decision" that will be made by Russian President Vladimir Putin for individual cases in accordance with the specific countries.

'Will inform when it is signed': Peskov

Russia took the countermeasure in response to the 27-country European Union bloc, G7, and Australia's recent price cap on Russian oil of $60 per barrel. An embargo was also agreed on the seaborne deliveries of Russian crude oil. The price cap was introduced to ensure that the Russian Federation does not bypass the EU-initiated sanctions by selling its oil to third countries in the Asian markets at high prices.

Putin's spokesperson Dmitry Peskov had slammed the decision warning that the price cap on Russian oil will prove to be “destabilising for the global energy markets''. "One thing is clear and undeniable: the adoption of these decisions is a step towards destabilising global energy markets," Peskov had noted at the state presser. EU had justified its economic maneuver saying that it is designed to restrict Russia's oil supplies from flowing into global markets and bypass the Western sanctions. It had argued that the price cap would clamp down on President Putin's ability to fund his war in Ukraine.

Peskov informed on Dec 27 that Kremlin will officially announce when Putin will sign the decree, according to the state-run news agency Tass. "We will inform when it is signed," Peskov stated when asked at a briefing if the decree was already signed on Tuesday and was formally in effect. Putin had previously berated the price ceiling and had pledged retaliatory economic sanctions in response to the "unfriendly actions of certain foreign states and international organizations."

The Head of the Russian Federation had instructed Kremlin to determine the sanctions imposed on the Russian Federation, labelling such acts as "unfriendly actions which contradict international law by the United States of America and foreign states and international organizations that joined them directed at illegitimately depriving the Russian Federation, the citizens of the Russian Federation and Russian legal entities of [their] property right and restricting their property right.".

"The supply of Russian oil and oil products to foreign legal entities and individuals is prohibited if the contracts for these supplies directly or indirectly are using a price cap," Russia's presidential decree on Tuesday read. 

Credit: Kremlin