Russia could ban crude sales and set maximum discounts in response to mid-cap

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Russia is considering three options, including banning the sale of petroleum to some countries and set maximum discounts at which it would sell its crude, to counter the price cap imposed by Western powers, the Russian newspaper Vedomosti reported on Wednesday.

The cap of $60 a barrel, set by G7 countries, the European Union and Australia, came into force on Monday in a bid to limit Russia’s ability to finance its war in Ukraine.

In response, the Kremlin and the Russian government are considering banning oil sales to all countries that supported the restriction, Vedomosti reported, citing two unnamed sources close to the government.

That option would also prohibit sales through intermediaries, not just directly from Russia. The second option under consideration would prohibit exports under contracts that include the condition of the price cap, regardless of the recipient country.

The third option would set maximum discounts on Russian crude from the Urals based on international benchmarks to allow sales, the newspaper reported.

Deputy Prime Minister Alexander Novak declared on Tuesday that Russia’s response mechanism to the oil price cap would take effect in December. Earlier, he said Russia could reduce oil production, but not much.

Bloomberg reported that Russia was also considering setting a minimum price for its international oil sales.

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