EconomyRetaliatory measures to Russia's oil price ceiling come into...

Retaliatory measures to Russia’s oil price ceiling come into effect


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An oil rocker in the Almetyevsk region of the Republic of Tatarstan. archive photo

Russia’s retaliatory measures to the Russian oil price ceiling take effect on February 1

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MOSCOW, February 1 – RIA Novosti. Russian President Vladimir Putin’s decree on retaliatory measures to the price ceiling of Russian oil from the G7 and the European Union comes into force on 1 February. The government has ordered exporters to monitor compliance with the decree until the final buyer of their oil, and experts point out that Russia’s response will show that non-market mechanisms for trading Russian Federation goods are unacceptable.

Western oil sanctions came into effect on December 5: The European Union stopped accepting Russian oil transported by sea. In addition, the G7 countries, Australia and the EU have set an upper cap on the price of this type of oil at US$60 per barrel, while allowing the marginal cost to be adjusted as needed. Similar measures for petroleum products will come into effect on February 5.

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In response, Putin banned the supply of Russian oil and oil products if the deal directly or indirectly provided a ceiling price. At the same time, the Presidential decree allows for the issuance of special permits. As of February 1, export of ceiling oil is prohibited. The date for petroleum products will be determined by the government.

As the head of state press secretary Dmitry Peskov has made clear, the ban also applies to existing contracts if they contain a reference to price ceilings. In addition, the Ministry of Energy of the Russian Federation announced that the presidential decree also applies to transactions with Russian oil up to the final consumer; this means, among other things, refusal to work with traders who use the cap price cap.

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The Ministry of Energy was instructed to monitor compliance with the supply ban and was also given the right, in agreement with the Ministry of Finance, to make official statements regarding the implementation of the decree. In addition, control over the implementation of the decree was given to the interdepartmental working group on issues related to activities in the fuel and energy sector.

The government announced

Then, on January 30, the Russian government issued a resolution explaining the rules for the implementation of the presidential decree. According to the document, the Ministry of Energy, together with the Ministry of Finance, received instructions to approve the procedure for monitoring the prices of exported Russian oil until March 1.

In addition, legal entities and individuals exporting raw materials are obliged not only to avoid a price cap on oil supply contracts, but also to monitor compliance with the decree up to the final buyer. . Exporters will notify the customs administration and the Ministry of Energy if they detect that a price restriction has been applied and will try to correct the violation themselves within 30 days.

If the customs authorities reveal the ceiling price application in the goods declaration, they will take measures to prevent the export of goods from the Russian Federation. They will also send information on this matter to Russian Railways and Transneft in order to take measures to prevent deliveries with cross-border violations with the states of the Eurasian Economic Union, which form a single customs zone with Russia.

What is this for

European countries noted that Russia’s ban on oil supply at a ceiling price would not affect them, as the EU has a parallel embargo on Russian oil. Accordingly, the region, in principle, will not buy oil from Russia if it is supplied by tankers.

However, as the experts interviewed by RIA Novosti noted, Russia’s countermeasures showed that non-market mechanisms for the trade of Russian goods are unacceptable.

According to them, the presidential decree banning the export of oil and petroleum products below the ceiling price provides the necessary legal basis for Russian oil and gas companies not to participate in the marginal price system. At the same time, response measures do not limit the actual selling price of “black gold”, which may be lower than the limit level due to changes in the price of reference grades, not the ceiling.

Source: Ria

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I am Emma Sickels, a highly experienced journalist specializing in news and economy. As an author at News Unrolled, I cover the latest trends in the economic sector and provide readers with valuable insights into its complexities. My work has been featured in various media outlets such as The New York Times, USA Today, Bloomberg Businessweek and many more.


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