The Russian authorities have “generally agreed” on a response to a Western coalition’s price cap on the country’s seaborne oil that took effect last week, the newspaper Vedomosti reported on Tuesday.
Moscow will ban oil sales under contracts that specify a price ceiling, according to the report, which cites government sources. Also, exports will be banned to countries that demand the cap as a condition in their supply contracts, or if their reference prices are fixed at the cap level of $60 per barrel.
A decree describing the mechanism is currently being finalized by the president’s administration, sources said. It will take effect immediately upon being issued and will be valid until July 1, 2023, with the possibility of extension. On Monday, Kremlin spokesman Dmitry Peskov said the decree would be announced “in the next few days.”
The document will also reportedly contain a clause that allows buyers to bypass the restrictions if granted government approval. The measures will not apply to contracts that were concluded prior to December 5, the date when the price cap took effect. One of the sources said the final draft of the decree might include a provision on the marginal discount for Russian oil relative to international grades.
The price cap was introduced by the EU, G7 countries and Australia on December 5. The mechanism prohibits Western companies from providing shipping, insurance, and other services to tankers carrying Russian oil, unless the cargo is bought at or below the price limit.
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