Putin signed a decree to counter the price limit on Russian oil, what is the impact on the energy market?

After the West's measures to limit the price of Russian oil were released, Russia publicly stated many times that it would not sell oil to countries with limited prices, and introduced countermeasures
.
On December 27, local time, Russian President Putin signed a presidential decree resolutely countering the West's move to set a price ceiling on Russian oil
.

In this presidential decree, what countermeasures does Putin propose and what impact will it have on the energy market?

US and West: Limit price! Russia: not selling you!

The presidential decree is called "Order on the Implementation of Special Economic Measures in the Field of Oil and Energy in Response to the Implementation of Maximum Prices for Russian Oil and Petroleum Products by Certain Countries.
"

Presidential decree
signed by Putin.
Image source: Official website of Russian Legal Information

According to the order, if the Western price limit mechanism is directly or indirectly introduced into the supply and marketing contract, the Russian side will prohibit the supply of Russian oil and petroleum products to relevant foreign legal and natural persons, and the ban will apply to all stages
of the external supply of oil.
The order is effective from February 1, 2023 and is valid until July 1
, 2023.

In other words, from February next year, if a foreign customer who has signed a contract with the Russian side directly or indirectly uses the mechanism of limiting the price of Russian oil at any stage of oil supply, sorry, do not sell!

Russia and Western countries such as the United States have a long
history of wrestling over oil.

The G7 (the United States, the United Kingdom, France, Germany, Japan, Italy and Canada) have held several rounds of discussions
since September about whether to cap the price of Russian oil exports.

In early December, EU member states finally reached an agreement
to set a price cap of $60 per barrel for seaborne oil exports to Russia.
The G7 and Australia have also announced similar price limits with the European Union
.
The price limit policy went into effect
on December 5.

Russia, for its part, has repeatedly said it will not sell oil
to countries that make such decisions.
He also explained that the price limit on Russian oil will disrupt the energy market, because too low oil prices will lead to underinvestment and shortage of funds in the oil industry, which may lead to a catastrophic spike in oil prices and a collapse
of world energy in a certain period.

What is the impact on the energy market?

The presidential decree signed by Putin pointed out that Russia's adoption of such countermeasures was carried out
in view of the unfriendly and violation of international law by the United States and other Western countries, in order to safeguard Russia's national interests.

Infographic: Putin
.

The order comes after Deputy Prime Minister Alexander Novak warned that Russia could cut oil production by 5 to 7 percent in early 2023, possibly to 500,000 to 700,000 barrels
per day.

He also said that despite Europe's efforts to reduce its dependence on Russian oil and gas, Russian energy exports are in demand around the world, and Russia has been seeking to diversify
buyers.

Reuters said in the report that such a price cap did not even appear during the Cold War between the West and the Soviet Union, which was moved to "weaken the Russian treasury and its military operations in Ukraine.
"

But some analysts believe the price cap has little direct impact
on Russia's current oil revenues.

For weeks, Russia has promised a formal response, and the final decree largely confirms what
officials have already said publicly.

Before and after Russia countered the West's price limit on Russian oil, there was also a delicate episode
.

According to "Russia Today" (RT), the news released on the website of the Russian National Oil Pipeline Transportation Company on the 26th shows that from January 1 next year, the transit transportation cost of Russian oil transported to EU countries through Ukraine through the "Friendship" oil pipeline is expected to rise, with a total increase of 18.
3%.

On the one hand, with Russia's countermeasures, on the other hand, Ukraine's plan to raise "tolls", it remains to be seen
how European oil prices will change.

According to Reuters, Russian Urals crude traded at about $56 per barrel on December 27, below the price ceiling set by the West
.

Brent crude oil rose slightly on the news, rising 1.
4% to $
85.
1 on the afternoon of December 27.

Russia has nothing to talk about with the West

Deputy Chairman of the Security Council of the Russian Federation Dmitry Medvedev recently published an article in the newspaper "Rossiya", saying that Russia no longer has reason to negotiate
with the West.
He pointed out that the Ukrainian crisis has worsened in the past year, and the words and deeds of Western leaders are alarming, which obliterates mutual trust and respect between Russia and the West and obliterates the possibility of
dialogue.

Russian Foreign Minister Sergei Lavrov's statement in an interview with TASS a few days ago also reflects the continuous cooling
of US-Russian and Russian-European relations.

He said that the US military is openly planning orders for the US defense industry in the coming years, constantly raising the standard of military spending to meet the needs of the Armed Forces of Ukraine, and "the United States is doing everything to prolong the conflict and make it more violent.
"

As for Europe, Lavrov said Russia's relations with the EU are currently "at an all-time low.
"
Russia has no intention of starting more joint projects with the EU and will not appoint a new permanent representative of Russia to the EU anytime soon
.