The price cap was agreed upon by the United States, Canada, the European Union, Japan, the United Kingdom and Australia, whereas, the United States and Canada have prohibited the import of Russian oil and the European Union has prohibited sea imports this month.

 Russian President Vladimir Putin signed a decree on Tuesday prohibiting oil supplies to countries that have imposed price caps on Russian oil and petroleum products, according to the decree published on the Kremlin's website. However, the move may prove largely symbolic.

Western countries imposed a price cap on Russian crude oil earlier this month, aimed at Moscow's remaining oil customers. It is enforced by companies that provide Russian oil with shipping, insurance and other services. Europe has also prohibited the import of Russian crude oil by sea.

The price cap was agreed upon by the United States, Canada, the European Union, Japan, the United Kingdom and Australia. The United States and Canada have prohibited the import of Russian oil and the European Union has prohibited sea imports this month.

Given the widespread bans in those countries, the Kremlin's new policy may be ineffective. The oil market was largely unaffected by Russia's decision, with the benchmark Brent crude oil price rising by less than 2 per cent on Tuesday. The price of US oil surpassed USD 80 per barrel, while Brent was trading around USD 86.

“Supplies of Russian oil and oil products to foreign legal entities and individuals are prohibited unless the contracts for these supplies directly or indirectly provide for the use of a price-fixing mechanism, the established ban applies at all stages of supply to the final buyer,” Putin said.

The ban on oil supplies under the price ceiling will take effect on 1 February and will last until 1 July 2023. According to the decree, the Russian government will determine the date of the ban on the supply of petroleum products.

Putin can also issue a special permit for the supply of Russian oil and oil products that the document forbids.

The price cap imposed by the West is intended to limit the Kremlin's revenue while allowing countries such as China and India to continue buying Russian oil as long as they do not pay more than USD 60 per barrel. It is intended to be enforced by companies that provide Russian oil with shipping, insurance and other services.

Market analysts have been anticipating a reaction from Moscow, which has stated that it will not cooperate with the price cap. Many feared that Russia would cut production, causing global energy markets to tremble.