Russia’s Response To The Oil Price Cap Is Nearly Ready

Russia is still considering its response to the $60 price cap on its crude oil, but it is close to completing the work on the countermeasures, Kremlin spokesman Dmitry Peskov said on Monday.

The EU banned from December 5 maritime transportation services from shipping Russia’s crude oil to third countries if the oil is bought above the price cap of $60 per barrel, and imposed an embargo on seaborne imports of Russian oil into the EU.  

“There is some groundwork that has been put down on paper, but there are also additional proposals that are being considered and discussed,” Peskov told reporters today, as carried by Russian agency TASS.

Russia still needs to work out which measures would best suit its interests, the Kremlin spokesman said.  

“The work is ongoing, but it is close to completion,” Peskov added.

Moscow says the price cap artificially limits prices in a non-market mechanism it will not accept.

By the end of this year, Russia expects to have legislation prepared that will ban Russian companies from selling oil to countries part of the Price Cap Coalition, Russia’s Deputy Prime Minister Alexander Novak said earlier this month.

Russian authorities have drafted a decree banning the sale of Russian crude oil to buyers part of the Price Cap Coalition or if the purchase is limited by the G7/EU price cap, as a measure to counter the $60 a barrel price ceiling set by the West, Russian daily Vedomosti reported last week, quoting a source with knowledge of the draft and government sources. 

The decree is expected to ban such sales from Russia by July 1, 2023, with a possibility of an extension, according to Vedomosti’s sources.

During a briefing with reporters early last week, Peskov said that the decree would be published “in the coming days.”