As a response to Western price caps for Russian oil, President Vladimir Putin banned Tuesday the export of oil to the United States, other Group of Seven countries and the European Union.
The ban will apply to all Russian oil products and gasoline and will be in effect from February 1st and continue until July 1. The Kremlin says that oil exports to affected Western countries can still be allowed if Putin issues a special order.
The price cap was imposed by the West to prevent Russian oil from rising above $60 per barrel. This was done to punish Russia for the war in Ukraine. Any country that sells more than the price cap could lose access to financial services and insurance that is essential for oil shipments to international waters.
Analysts believe Russia’s profit-making from its recent high energy prices could be subduing in the coming months, adding more pressure to it over its war which has also brought sanctions against individuals.
Putin’s degree didn’t have an immediate impact on the oil market. The benchmark Brent oil price rose less than 2% Tuesday while U.S. crude oil rose to above $80 per barrel. Russia has diverted large amounts of oil that it used to ship to the West to send it to countries like China, India and Turkey at a steep discount.