Russian government has announced a ban on oil sales to countries or companies that comply with a price cap agreed by western nations earlier this month. the price cap limits the amount of money countries can pay for russian oil to $60 per barrel. the ban will take effect from 1 february until 1 july. the g7, eu, australia, and the us all agreed to the price cap, which was put forward in september in order to limit the amount of revenue russia can generate from oil sales to finance their war in ukraine.
Price cap was agreed on 5 december and is designed to reduce russian oil revenue further by preventing any crude oil sold for more than $60 from being shipped with g7 and eu tankers, insurance companies and credit institutions. many major global shipping and insurance companies are based within the g7. ukraine’s president volodymyr zelensky called the price cap a “weak” idea that was not “serious” enough to damage the russian economy.
Decree also said russian president vladimir putin could give “special permission” to supply to countries that fall under the ban. western demand for russian oil fell after the invasion, but russian revenue remained high due to a price spike and demand from other countries, including india and china. oil is currently trading at around $80 a barrel – well down from the peaks of above $120, seen in march and june. the price cap aims to reduce russian oil revenue further and is a measure taken by the g7 and eu to limit the amount of money russia can generate from oil sales to finance the war in ukraine.