President Vladimir Putin issued Russia’s long-awaited response to a Western price cap on Tuesday, signing a decree prohibiting the supply of crude oil and oil products to nations that adhere to the cap beginning Feb. 1 for five months.
The Group of Seven major powers, the European Union, and Australia agreed this month to impose a $60-per-barrel price cap on Russian seaborne crude oil beginning December 5 in response to Moscow’s ‘special military operation’ in Ukraine.
While the cap is not far below the windfall price Russia was able to sell its oil for this year, which helped Moscow offset the effects of financial sanctions, it is close to the price at which Russian oil is currently traded.
After Saudi Arabia, Russia is the second-largest oil exporter in the world, and a significant decline in its output would have a significant impact on the world’s energy supplies.
The decree was announced as a direct response to ‘actions that are unfriendly and contradictory to international law by the United States and foreign states and international organisations joining them’ and was posted on a government portal and the Kremlin website.
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