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EU and G7 partners agree price cap on Russian petroleum products
8/2/2023
News
The European Union (EU) and international Price Cap Coalition (comprising G7 countries Canada, France, Germany, Italy, Japan, the UK and the US, as well as Australia) have adopted further price caps for seaborne Russian petroleum products such as diesel and fuel oil in a bid to hit Russia’s revenues even harder and reduce its ability to wage war in Ukraine, while also helping to stabilise global energy markets.
The new caps come on top of the $60/b price cap for crude oil in force since December 2022 and complements the EU’s full ban on importing seaborne crude oil and petroleum products into the European Union.
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/b and the maximum price for discount-to-crude will be $45/b.
The price cap on petroleum products entered into force on 5 February 2023. It included a 55-day wind-down period for seaborne Russian petroleum products purchased above the price cap, provided it was 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’, reports the European Commission (EC), and will be ‘reviewed and adjusted as appropriate’.
