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Vladimir Putin bans Russian oil exports to countries that imposed price cap over Ukraine war

President Vladimir Putin has delivered Russia's long-awaited response to a Western price cap, signing off on a five-month ban on the supply of crude oil and oil products to nations that impose the cap.

The Group of Seven major powers, the European Union and Australia agreed this month to a $US60 ($89)-per-barrel price cap on Russian seaborne crude oil effective from December 5 over Moscow's "special military operation" in Ukraine.

I read this as Russia is banning oil exports to any country that imposes the price cap. In other words, a currently-banned country can get the ban lifted if they remove the price cap, and a currently-unbanned country can get banned if they impose the price cap.

Aside from the Group of Seven, the European Union, and Australia, are there any other countries which are affected by this ban? Phrased differently, aside from these three entities/countries, which countries are imposing the price cap?

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  • If I understood this correctly, the idea of the Western countries was that in practice their price cap would apply to almost all Russian oil exports because any oil export would have to make use of a bank, shipping company, refinery or similar that is located in one of the participating countries and the price cap would be imposed through that. I don't know whether this will work as intended but if it does the Russian law might not actually change anything.
    – quarague
    Dec 29, 2022 at 13:15

2 Answers 2

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They haven't said yet.

As of Dec 28th, 2022, we don't know.

The decree is On the application of special economic measures in the fuel and energy sector in connection with the establishment by some foreign states of the maximum price for Russian oil and oil products (and in the original Russian) does not say. It only names the United States by name.

It covers any nations which banned the transport of Russian oil by sea, or fixed Russian oil prices.

  1. Establish that in connection with the introduction by the United States of America and foreign states that have joined them of a ban on the sea transportation of Russian oil and oil products, the provision of services related to such transportation, which is applied in the case of the sale of Russian oil and oil products at prices above the marginal price, established by the said foreign states (price fixing mechanism), the supply of Russian oil and oil products to foreign legal entities and individuals is prohibited, provided that the contracts for these supplies directly or indirectly provide for the use of the price cap mechanism. The established prohibition applies at all stages of supply to the final buyer.

The Ministry of Energy gets to decide.

  1. The Ministry of Energy of the Russian Federation shall, on a regular basis, in the manner determined by the Government of the Russian Federation, monitor the implementation of paragraph 1 of this Decree.

Putin gets to override.

  1. Deliveries of Russian oil and oil products, the implementation of which is prohibited in accordance with this Decree, may be carried out on the basis of a special decision of the President of the Russian Federation.

It is effective from Feb 1st, 2023 to July 1st, 2023, which doesn't seem very long. Maybe another decree will extend it.

  1. The ban on the supply of Russian oil established by this Decree shall apply from the date this Decree comes into force.
  1. The ban on the supply of Russian petroleum products established by this Decree shall apply from the date determined by the Government of the Russian Federation, but not earlier than from the date this Decree comes into force.
  1. This Decree comes into force on February 1, 2023 and is valid until July 1, 2023.
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    First seemed kinda odd that you'd have a decree without stating who is affected. But... remember a) this a fudge of different Western interests and b) the $60 ceiling is telling countries to instruct their agents and commercial companies not to provide services (insurance, shipping, etc..) for Russian oil at more than $60. I.e. if Russia "banned" all G7 + EU countries right now it would lose leverage by "shooting its load". And sales. However, as a long as a country does not "cross Russia" it can hope not to get on their "naughty list". So a good way to try to sow disunity. Poker FTW! Dec 29, 2022 at 22:30
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    @ItalianPhilosophers4Monica 1) It makes sense not to hard-code countries into the decree; circumstances might change, countries might join and leave. 2) I think you're right that this is an attempt to sow disunity by giving nations a carrot (oil) and stick (no oil), I'm just not sure how effective it will be. The ban comes at the end of winter when the stick will lose some of its effectiveness due to warming temperatures. And with two months warning, countries will have time to prepare. None of his attempts to break allied unity have worked so far.
    – Schwern
    Dec 29, 2022 at 23:00
  • Putin further weakened his counter-sanction in April; from then it no longer applied to "friendly countries" even if they participated in a capped import together with e.g. a transporter or insurer from the "unfriendly countries" that established the cap. May 26, 2023 at 18:52
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Putin substantially weakened his counter-sanction in April; from then it no longer applied to "friendly countries" even if they participated in a capped import together with e.g. a transporter or insurer from the "unfriendly countries" that established the cap scheme. (A reminder how the cap works, roughly: it prohibits G7+EU companies from insuring or transporting Russian oil by sea, unless the price of that shipment is capped.)

The Russian counter-sanction was meaningless on most of the imposing (G7+EU) countries to begin with since most of them had already banned imports of Russian oil (by sea) to their own territories. The only exception among these is/was Bulgaria, which received a dispensation from the EU ban to keep importing Russian oil by sea until the end of 2024. (Croatia also got one, but only for VGO, until the end of 2023.)

So, Bulgaria and Croatia (which are on the "unfriendly countries" list) are the only countries to which Putin's counter-sanction could meaningfully apply to, after April. But I've not heard of Bulgaria being denied Russian oil sales until now, or Croatia being denied VGO.

The other two more major importers of Russian oil (than Bulgaria) are India and China, this year. (India used to import next to no Russian oil before the war, by the way.) And I guess Russia wasn't willing to go through and sanction these two with an oil ban, even though they seemed happy to apply the price cap, if US Treasury data is to be believed.

In a slightly weird setup, Bulgaria also exported large amounts of refined petroleum products [mostly red diesel] to Ukraine in 2022, 1,000-fold the amount they did in 2021. But their largest refinery is owned by Lukoil, a Russian company.

Hurting Croatia might seem something the Kremlin's would have fewer qualms about, especially since them not securing an exemption for Russian oil (instead of just VGO) hurt Serbia (which is rather pro-Russian, and imported oil through Croatia). But I've not heard of Russian VGO sales to Croatia being stopped either. Granted, VGO is a somewhat obscure product, so it might not make the English-language news even if Russia does/did end those sales to Croatia.

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