EU and G7 adopted further price caps for seaborne Russian petroleum products
The price cap on petroleum products will be implemented from 5 February 2023
The European Union – together with the international G7+ Price Cap Coalition – have adopted further price caps for seaborne Russian petroleum products (such as diesel and fuel oil), according to the official statement published on the official website of the European Commission.
According to the statement, the network 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.
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.
On 2 December 2022, G7 countries and Australia imposed a price cap for Russian crude oil from 5 December 2022. The ban covers maritime transportation services for crude above the $60 per barrel.
Russian President Vladimir Putin earlier signed an Executive Order on special economic measures in the fuel-and-energy sector in response to the price cap established on Russian oil and oil products by some foreign states. The Executive Order has established that Russia bans the sale of oil and oil products to foreign companies and individuals if the contracts on these sales include the use of this mechanism directly or indirectly. The established ban applies to all stages of sales up to and including the final buyer. The order is effective from February 1, 2023 until 1 July 2023.