Russia Ban Exports to Buyers that Implement Price Cap

Russian yesterday announced a ban on the supply of crude oil and oil products to at least Jul 2023 to buyers that implement the $60 price cap. The ban avoids more extreme measures in retaliation to the price cap such as a minimum oil sale price or a ban on specific countries.

• The ban on crude will begin on 1 Feb with the ban on oil products still to be determined but not earlier than 1 Feb.
• The presidential decree said the restriction applies to “supply contracts that directly or indirectly use the mechanism of setting a price cap,” and “the ban is in force at all stages up until the final buyer.”
• The decree includes a clause that allows for Putin to overrule the ban in special cases.
• Russia’s oil output may fall by 5% or 6% early next year by between 500kbpd and 700kbpd according to Deputy Prime Minister Alexander Novak last week. He said oil production in Russia will grow by about 2% to 535 million tonnes in 2022.