Oil prices little changed as Russia unveils export ban

Russia on Tuesday banned oil sales to countries and companies that comply with a price cap agreed by Western nations, briefly helping to lift crude prices.

"The supply of Russian oil and oil products to foreign legal entities and individuals is prohibited if the contracts for these supplies directly or indirectly" are using a price cap, a presidential decree said.

The decree will be in effect from Feb 1 until July 1.

It added that the ban may be lifted in individual cases on the basis of a "special decision" from Russian President Vladimir Putin.

The price ceiling of US$60 (RM265.38) per barrel agreed by the European Union, G7 and Australia came into force in early December and seeks to restrict Russia's revenue while making sure Moscow keeps supplying the global market.

Oil prices initially jumped on the announcement and analysts pointed to expectations for stronger demand due to reopening actions by China after lengthy Covid-19 restrictions.

But most of the gains in oil prices had evaporated by the end of the trading session. Analysts have noted that Moscow's move will not impede deliveries to India, China and other importers that did not join the price cap.

The Russian action "should not come too much as a surprise for the market really, given what we heard from them over the recent months," said Matt Smith of Kpler.

"It'll tighten things up a bit, but not too much."

Brent oil futures for delivery in February ended up 0.5% at US$84.33 a barrel.

US benchmark West Texas Intermediate for delivery in February slipped less than 0.1% to US$79.53 a barrel.

Introduced alongside an EU embargo on seaborne deliveries of Russian crude oil, the cap aims to ensure Russia cannot bypass the embargo by selling its oil to third countries at high prices.

Russia has said the cap will not affect its military campaign in Ukraine and expressed confidence it would find new buyers.