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Russia to ban Oil Exports to Countries that Implement a Price Cap From Feb

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Russia to ban Oil Exports to Countries that Implement a Price Cap From Feb

(CTN News) – On Tuesday, President Vladimir Putin signed a decree that forbids the delivery of crude oil and oil products beginning on February 1 for five months to countries that apply the quota. This was Russia’s long-awaited reaction to a Western pricing restriction.

In response to Moscow’s “special military operation” in Ukraine, the Group of Seven major nations, the European Union, and Australia agreed to a $60 per barrel price restriction on Russian crude oil that would take effect on December 5.

The mandate was announced as a direct reaction to “activities that are hostile and inconsistent to international law by the United Governments and other states and international organizations joining them” and was posted on a government portal and the Kremlin website.

The decree specifically mentioned the United States and other foreign states that have implemented the price cap, stating that “delivery of Russian oil and oil products to foreign entities and individuals are banned, on the condition that in the contracts for these supplies, the use of a maximum price fixing mechanism is directly or indirectly envisaged.”

The proclamation read: “This…comes into effect on February 1, 2023, and applies until July 1, 2023.” It also included a provision allowing Putin to override the prohibition in exceptional circumstances.

Russia’s Crude oil exports will be banned from February 1.

Crude oil exports will be prohibited starting on February 1, but the Russian government will decide when oil products will also be prohibited; this date may be post-February 1.

The price limit, which was unheard of even during the Cold War between the West and the Soviet Union, is intended to harm both the Russian government’s finances and Moscow’s military operations in Ukraine.

As the oil price limit reduces export revenue, Russia’s budget deficit in 2023 may be higher than the targeted 2% of GDP, according to Finance Minister Anton Siluanov.

This presents Moscow with an additional financial challenge as it spends extensively on its military operation in Ukraine.

However, according to some experts, the limit won’t have much of an immediate effect on Moscow’s existing oil profits.

Related CTN News:

Putin Says Russia’s War in Ukraine Might be a ‘Long-Term Process

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