Russia bans oil exporters from adhering to price caps

Russia on Monday banned domestic oil exporters and customs bodies from adhering to Western-imposed price caps on Russian crude.

The decree, published on Monday, was signed by Russian Prime Minister Mikhail Mishustin on Saturday. The measure was issued to help enforce President Vladimir Putin's decree on Dec 27 that prohibits the supply of crude oil and oil products from Feb 1, for five months, to nations that abide by the caps.

The G7 economies, the European Union and Australia agreed on Dec 5 to ban the use of Western-supplied maritime insurance, finance and brokering for seaborne Russian oil priced above $60 per barrel as part of sanctions on Moscow.

The new Russian act bans companies and individuals from including oil price cap mechanisms in their contracts. They also have to report to customs officials and the energy ministry any attempts to impose the price caps.

In addition, customs bodies have to prevent goods from leaving Russia if they find such mechanisms have been applied.

The West plans from Feb 5 to set two caps on Russian oil products, one on products that trade at a premium to crude, such as diesel or gas oil, and one for products that trade at a discount to crude, such as fuel oil.

The Russian act also calls on the energy ministry, with the approval of the finance ministry, to work out an approach for monitoring prices of Russian oil exports by March 1.

Meanwhile, the International Monetary Fund expects the West's price on Russian crude to have little impact, according to its World Economic Outlook update.

"At the current oil price cap level of the Group of Seven, Russian crude oil export volumes are not expected to be significantly affected, with Russian trade continuing to be redirected from sanctioning to non-sanctioning countries," the document said.

The IMF has revised upward the estimates of Russia's economic development and forecasts the country's GDP to grow by 0.3 percent in the current year and by 2.1 percent in 2024.

REN QI in Moscow

renqi@chinadaily.com.cn