Putin bans sale of oil to buyers who comply with price cap

Russian President Vladimir Putin signed a decree on measures responding to a recently adopted price cap on Russian oil.

The decree prohibits supplying oil to companies and individuals if the sale is governed by contracts that “directly or indirectly allow for the use of the price cap mechanism.”

The ban on oil sales will take effect on February 1. The decree also provides for a ban on supplying petroleum products. The government must determine the appropriate date for that ban to take effect.

Exceptions to the ban will be possible by a special decision by the president.

An agreement to cap the price of Russian oil shipped by sea to the EU, Australia, and the G7 countries came into effect on December 5. These countries, with several exceptions, agreed to buy and transport Russian oil only if its price did not exceed $60 USD per barrel. The logic for these measures in the West is that they will reduce Russian state revenue and make it more difficult for Russia to finance war.