EU and G7 set price cap on Russian petroleum products
Oil tanker - Image by Dimitris Vetsikas from Pixabay
(BRUSSELS) - The European Union - together with the G7+ Price Cap Coalition - on Saturday adopted further price caps for seaborne petroleum products (such as diesel and fuel oil) originating in, or exported from Russia.
This decision will hit Russia's revenues even harder and reduce its ability to wage war in Ukraine. It will also help stabilise global energy markets, benefitting countries across the world.
The decision comes on top of the price cap for crude oil in force since December 2022, and will complement the EU's full ban on importing seaborne crude oil and petroleum products into the European Union.
The Price Cap Coalition is composed of Australia, Canada, the EU, Japan, the UK, and the US.
Putin and Russia are paying a heavy price, as sanctions are eroding Russia's economy, said Commission president Ursula von der Leyen: "Today, we are turning up the pressure further by introducing additional price caps on Russian petroleum products. This has been agreed with our G7 partners and will further erode Putin's resources to wage war. By 24 February, exactly one year since the invasion started, we aim to have the tenth package of sanctions in place."
Two price levels have been set for Russian petroleum products: one for "premium-to-crude" petroleum products, such as diesel, kerosene and gasoline, and the other for "discount-to-crude" petroleum products, such as fuel oil and naphtha, reflecting market dynamics. The maximum price for premium-to-crude products will be 100 USD per barrel and the maximum price for discount-to-crude will be 45 USD per barrel.
The price cap on petroleum products will be implemented from 5 February 2023. It includes a 55-day wind-down period for seaborne Russian petroleum products purchased above the price cap, provided it is loaded onto a vessel at the port of loading prior to 5 February 2023 and unloaded at the final port of destination prior to 1 April 2023.
The price caps for petroleum products and crude oil will be continually monitored to ensure their effectiveness and impact. The price caps themselves will be reviewed and adjusted as appropriate.
The European Commission has also published a guidance document on the implementation of the price caps.
Commission Guidance on the oil price cap