Russian President Vladimir Putin looks during a meeting of the Russia - Land of Opportunity platform supervisory board at the Catherine's Hall of the Kremlin in Moscow on 20 April 2022 (Sputnik)

Russian President Vladimir Putin signed a decree to prohibit the sale of Russian oil and its derivates to countries that imposed the price cap.

The decree targets contracts that include a direct or indirect price cap clause.

"The supply of Russian oil and petroleum products to foreign legal entities and individuals is prohibited, provided that the contracts for these supplies directly or indirectly contain use of a mechanism for capping the marginal price. The ban is applied at all supply stages to the final buyer," the decree stated.

However, the document added, "Supplies of Russian oil and petroleum products, which is prohibited in accordance with this decree, may be carried out based on a special decision of the Russian president."

The ban decision will go into force starting February 1 of 2023 and valid till June 1, which is (end-date) susceptable to change by the Cabinet.

The European Union set a limit on the price of Russian crude oil at $60 per barrel on December 5. Every two months, the cap will be examined to ensure that it is still 5% below the baseline set by the International Energy Agency.

Additionally, the G7 countries and Australia have set a $60 per barrel ceiling on Russian oil exports.

Countries and companies that decide not to apply the price cap can still purchase it but cannot do so through Western companies that provide insurance or transport services.

Since the start of the war in Ukraine, Western nations have been seeking methods to reduce Russia's revenue from oil and gas exports. The G7 finance ministers asked all countries to endorse the idea in September by confirming their determination to set a price ceiling on Russian oil.

Russia has pledged to stop supplying oil and gas to countries that impose price ceilings. Russia's Permanent Representative to International Organizations in Vienna, Mikhail Ulyanov, declared earlier in December that the European Union will have to live without Russian oil starting this year as a repercussion of the price cap imposed on the country's oil.

In response to the West's decision to enact the price ceiling, Russian Deputy Prime Minister Alexander Novak stated that Moscow would not accept it. Only consumers who follow the rules of the market will be accepted by Russia, Novak continued.

Russian President Vladimir Putin said earlier in September that Russia will stop supplying oil and gas to countries that impose price ceilings.

We will not supply anything at all if it is contrary to our interests, in this case economic (interests)," he said. "No gas, no oil, no coal, no fuel oil, nothing."