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    EU and Allies Impose Price Cap on Russian Oil Products in Response to Ukraine Invasion

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    The European Union, the United States, Canada, France, Germany, Italy, Japan, and the United Kingdom have agreed to impose a price cap on Russian oil products in response to Moscow’s invasion of Ukraine.[0] This will include products such as diesel, kerosene, and gasoline, with a cap of $100 per barrel, and fuel oil and other products at a cap of $45 per barrel.[1] The price cap applies to cargoes shipped on vessels owned by companies based in the EU or G7.[2]

    The price cap mechanism has been designed to reduce Russian revenues while recognizing the importance of stable energy markets and minimizing negative economic effects.[3] It is intended to replace around 1 million barrels per day (bpd) of Russian fuel imports, including 600,000 bpd-650,000 bpd of diesel.[4]

    On Sunday, February 5th, the EU ban on imports of Russian refined oil products will take effect, adding to an embargo on seaborne Russian crude that began in December.[5] This will bar access to ships, marine insurers and services unless the refined oil products are purchased for a price at or below an agreed limit.[6]

    The US and its allies hope to prevent Russia from earning much from oil exports and to keep Russian oil available on global markets to keep prices steady.[7] Poland and the Baltic nations requested lower prices in order to minimize revenues for Russia.[7]

    The new sanctions measure in the European Union is a balanced, restrictive measure that keeps the price of oil and its derivatives low enough to reduce Russian revenues while ensuring access for third countries.[7] It is the latest step in the American-led Western alliance to hinder Moscow’s energy exports, the most vital sector of its economy.[8]

    0. “European Union and Australia agree to new moves to hinder Putin’s war” Sky News Australia, 4 Feb. 2023, https://www.skynews.com.au/world-news/vladimir-putin-to-be-hit-with-tenth-round-of-sanctions-as-g7-european-union-and-australia-agree-to-price-cap-on-russian-petroleum-products-amid-ukraine-war/news-story/f1b750ee6efa6cfc13b7b4802eb05f31

    1. “G7, EU, Australia agree on price caps for Russian petroleum products” NHK WORLD, 4 Feb. 2023, https://www3.nhk.or.jp/nhkworld/en/news/20230204_10

    2. “EU Embargo On Russian Oil Products Enters Into Effect” OilPrice.com, 6 Feb. 2023, https://oilprice.com/Latest-Energy-News/World-News/EU-Embargo-On-Russian-Oil-Products-Enters-Into-Effect.html

    3. “Canada joining G-7 countries, Australia to expand price caps on Russian oil” Global News, 4 Feb. 2023, https://globalnews.ca/news/9460460/canada-price-caps-russian-oil/

    4. “The EU Needs More Diesel, But The Middle East Can't Supply It All” OilPrice.com, 4 Feb. 2023, https://oilprice.com/Energy/Energy-General/The-EU-Needs-More-Diesel-But-The-Middle-East-Cant-Supply-It-All.html

    5. “Why Europe's new Russian fuel sanctions won't cripple Moscow” Markets Insider, 4 Feb. 2023, https://markets.businessinsider.com/news/commodities/russia-europe-sanctions-oil-diesel-energy-products-fuel-moscow-ukraine-2023-2

    6. “Europe bans Russian diesel and other oil products” NPR, 3 Feb. 2023, https://www.npr.org/2023/02/03/1153833640/europe-russian-oil-products-ban

    7. “EU countries agree on new price cap for Russian oil” NL Times, 4 Feb. 2023, https://nltimes.nl/2023/02/04/eu-countries-agree-new-price-cap-russian-oil

    8. “The Fixed Game of Price Caps on Russian Oil” The American Conservative, 4 Feb. 2023, https://www.theamericanconservative.com/the-fixed-game-of-price-caps-on-russian-oil/

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