Russian president extends decree against price cap in oil contracts until July 2026

MOSCOW. Dec 16 (Interfax) - President Vladimir Putin has extended the decree "On the application of special economic measures in the fuel and energy in connection with the imposition of maximum prices for Russian oil and oil products by certain foreign nations" until June 2026, the published decree said.

This decree first went into effect on February 1, 2023 and has been extended several times since then, the last time until the end of 2025.

The decree prohibits the sale of Russian crude and oil products to foreign legal entities and individuals under contracts that include the condition of a price cap imposed by the United States and a number of other countries.

The so-called Price Cap Coalition of G7 and European Union countries imposed a ban on imports of Russian crude oil and oil products, but allowed shipowners from their countries to transport them and provide brokering and other services as long as the commodity is being sold at a price that is no higher than the cap set by the coalition. The goal of the embargo and price cap on Russian is to limit Russian revenues from the sale of fossil fuels while maintaining sufficient supply of oil and oil products on the world market.

The Kremlin sees the price cap as a non-market instrument. Companies and individuals who enter into supply contracts must prevent agreements and addendums to them from including provisions about a price cap. They must also monitor all the way up to the end buyer to ensure that this condition is not applied.