Russia Updates

President Rasputin finally signed a decree that will ban Russian companies to supply crude to foreign countries if contract to contain any mention of a price cap. This decree will come into force starting February 1st 2023, i.e. two months after the oil price cap on Russian oil was introduced by Western countries. The exact mechanism to enforce the decision is still not fully developed, but for now the customs authority will be the one responsible.

What is not surprising, is that there are no direct countermeasures against the countries which participate in the oil price cap scheme. The decree only mentioned specific contracts, not countries. Which means, any Western country can still buy Russian crude and oil products without any hindrance, as long as they manage to formulate contracts that don’t directly mention any price cap. On the other hand, the non-Western countries which didn’t support the oil price cap, will be now forbidden to use any price limiting measures in their contracts as well, even if done for legitimate business reasons.

The long period of “developing” the response to Western oil price cap is hard to understand, since this measure was in the working since summer. For sure, Russian authorities had enough time to prepare corresponding countermeasures. Yet, the long delayed Russian response helped to quite the energy market (for the benefit of Western countries first and foremost), and will now be much less visible to the Western markets and the public, who didn’t get the awaited response for three weeks after the oil price cap was imposed on Russian oil export.

The only explanation I can think of, is that Russian authorities were engaged in secret negotiations with other countries in order to somehow accommodate them. The lack of directed measures against oil price cap imposing countries lead me to believe those secret negotiations were with those “unfriendly” countries, and not the neutral or aligned ones (some of which would benefit directly or indirectly from higher oil prices).


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