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