The Government of Russia is drafting a presidential decree that prohibits companies from that country, sell oil to any nation that places a ceiling on the purchase price.
The decree would prohibit any type of sale to companies and countries that enter a price cap mechanismaccording to a source close to the Kremlin told the Bloomberg news agency.
The measure by Russia – the world’s second largest oil producer – would be a direct response to the allied countries in the European Union (EU) and the G7, which are discussing an initiative of this nature.
A limit on the purchase price would reduce the income that Russia receives from selling oilan Fsource of financing for its armed forces in the context of the conflict with Ukraine, and at the same time, avoid banning the import of their crude since, otherwise, there could be a sharp increase in the international value of this commodity, and add more fire to inflation that in Europe and the United States is at record levels.
A limit on the purchase price would reduce the income Russia receives from selling oil, a source of financing for its armed forces in the context of the conflict with Ukraine.
The bill would ban all companies from providing services – including, for example, shipping and insurance – to shipments of Russian oil anywhere in the world, unless the oil is sold below the ceiling.
The countries of the Group of Seven (G7) Already agreed last September to apply a cap, And the goal now is for more countries to join the measure so that it has a greater effect, including large consumers such as China and India.
Nevertheless, in the case of the EUthe negotiations between the countries of the bloc reached an impasse yesterday, after there were disagreements as to what the maximum price would be.
Some members, such as those from the Baltic region and Poland, reject the proposal to set the price at US$65 a barrel since, in effect, it would be above the US$63 at which Russian oil is currently traded, and will allow Russia’s gains to remain virtually unchanged.
Currently the production cost of a barrel for Russia it stands between US$30 and US$40.
The dialogue in the EU will continue this Monday, and to reach an agreement on the pricethe top c proposalIt would come into force from December 5 in the case of oil vessels, and on February 5 for derived products such as diesel.
If an agreement is not reached with the cap -which would make it possible to continue marketing products below said value-, the prohibition will apply to all imports regardless of price.
Russian President Vladimir Putin and other Kremlin officials have already warned in recent weeks that they will not export energy to countries that impose a ceiling on the price.
As stated this week Deputy Prime Minister Alexander Novak in the case of establishing a ceiling Russia simply it will reduce its production or redirect its offer to “market-oriented allies”.
The cap will lead to a drop in investment and “a potential shortfall in the supply of oil,” Novak warned.
Some analysts doubt the effect of the measure since China, India and Turkey are currently emerging as the main destinations for Russian exports and, so far, have shown no intention of joining the top.
