The US and its allies have agreed to a price cap on imports of Russian petroleum products in response to the country’s invasion of Ukraine. The agreement between the US, the G7, the European Union and Australia places a price cap on “seaborne Russian-origin petroleum products,” according to the US Department of Treasury.
The price of “premium-to-crude” petroleum products such as diesel, kerosene and gasoline will be capped at $100 USD per barrel, whereas “discount-to-crude” petroleum products such as fuel oil will be capped at $45 USD per barrel. The new EU ban will apply to anything produced from Russian crude oil and will take effect on Sunday, February 5.
The US and its allies are trying to further limit Russia’s ability to make money and finance its war efforts with the new price limits, according to a senior Treasury official.
The official stated to reporters on Friday that their aim is not to cause a collapse of the Russian economy. We are aiming to make it improbable for the Kremlin to both bolster the economy and finance their war.
The official said the US and its allies are also going after Russia’s military industrialized complex and supply chain so they can’t use the money they have to buy the weapons they need.
In December, the same organization set a limit on the price of crude oil, according to a Treasury representative, which was already hindering Russia's capacity to fund the conflict. According to data released by Russia, the monthly tax revenues from energy sales had a 46% decrease from the preceding month.
Under both sanctions measures, Western insurance and shipping companies are prohibited from insuring or transporting Russian crude oil and petroleum products unless they are purchased at or below the established price ceiling.
The agreement is meant to ensure that Russian diesel and other oil products can still be sold to third countries and prevent any massive spike in prices following the EU ban. Recent weeks have seen significant rises in imports, which have soothed worries of a potential shortage caused by the European Union's prohibition of Russian diesel.
0. “Is EU ready for life without Russian diesel?” DW (English), 3 Feb. 2023, https://www.dw.com/en/is-eu-ready-for-life-without-russian-diesel/a-64600376
1. “Europe set to ban Russian diesel and other oil products” NPR, 3 Feb. 2023, https://www.npr.org/2023/02/03/1153833640/europe-russian-oil-products-ban
2. “US, EU, G7 and Australia announce new price cap on Russian petroleum products” CNN, 3 Feb. 2023, https://www.cnn.com/2023/02/03/politics/price-caps-russian-petroleum-products/index.html
3. “US, EU, G7 and Australia announce new price cap on Russian petroleum products” WENY-TV, 3 Feb. 2023, https://www.weny.com/story/48309769/us-eu-g7-and-australia-announce-new-price-cap-on-russian-petroleum-products
4. “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
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