Russian president prolongs oil sales ban on price cap adherents

Russian President Vladimir Putin has prolonged retaliatory measures against the oil price cap imposed by certain foreign nations, extending the prohibition on the sale of Russian oil and oil products until December 31, 2025.

The order, signifies Moscow's sustained defiance against Western sanctions, Caliber.Az reports, citing Russian media.

Under the executive order, the export of Russian crude oil and refined petroleum products remains explicitly forbidden if their contractual agreements, whether directly or indirectly, incorporate the price cap mandated by the G7 countries, the European Union, and Australia. This directive reinforces Moscow's unwavering stance against what it views as attempts to artificially depress the value of its key energy exports.

The order, initially promulgated on February 1, 2023, has been successively prolonged on multiple occasions, with its most recent iteration valid through June 30 of the current year. The directive explicitly forbids the sale of Russian crude oil and petroleum products to foreign natural and legal persons should the underlying contractual agreements directly or indirectly incorporate a price cap mandated by the United States and various other nations.

The G7 countries and the European Union, forming the Price Cap Coalition, instituted an embargo on imports of Russian oil and its derivatives. However, they simultaneously permitted their respective shipowners to engage in transportation, brokerage, and related services, provided the commodities are transacted at a price not exceeding the cap established by the coalition. The dual objective of this embargo and price cap on Russian hydrocarbon exports is to curtail Moscow's fiscal proceeds from energy sales, while simultaneously ensuring adequate global market supply.

The Kremlin, for its part, views the imposition of this price cap as a fundamentally non-market mechanism. Consequently, entities and individuals party to Russian supply contracts are mandated to preclude the inclusion of price ceiling stipulations within their agreements and any subsequent addenda. Furthermore, they are responsible for ensuring the rigorous oversight of this condition's non-application throughout the entire supply chain, extending to the ultimate consumer.

By Vafa Guliyeva