Russia Implements Oil Supply Ban to 'Unfriendly' Countries

Today in Russia, a ban on oil supplies to 'unfriendly' countries, which sets a price cap on Russian oil products, has come into effect. According to a decree signed by President Vladimir Putin on December 27, the supply of Russian oil and petroleum products to foreign citizens and companies is prohibited if contracts include 'directly or indirectly a mechanism for setting a price cap.'

This has been reported by the Russian service of Deutsche Welle. Exporting oil at a limited price is only allowed with the permission of the President of Russia. The ban will be in effect from February 1 until July 1. The government will determine the duration of the oil supply ban.

As part of the eighth package of sanctions imposed on Russia, since December 5, a price cap of $60 per barrel is in place for Russian oil exported by sea. Western countries have set a price cap on oil to complicate the financing of military operations against Ukraine, while also preventing a halt in oil supplies and a surge in global prices.

The price cap means that the countries of the 'Group of Seven' and the European Union will only provide insurance and financial services related to Russian oil and petroleum products if they are purchased at the maximum stipulated price or lower.

The media notes that since the implementation of the price cap, the Russian oil market has become highly opaque. According to official data, Russia has been forced to sell oil at $47 per barrel, although experts estimate its actual price should be around $70-75 per barrel.