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Take the cap on the price of Russian oil

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BRUSSELS. After the cap on the price of Russian crude oil, the cap on refined petroleum products is also triggered. Representatives of the 27 EU member states agreed to put even more pressure on the Russian Federation’s economy as a response to Ukraine’s aggression. A distinction is made between high-quality and low-quality products. For the former the ceiling is set at 100 dollars a barrel, for the latter 45 dollars a barrel. Diesel “made in Russia” exported abroad falls into the first category, and naphtha into the second. The price cap adds to the one already approved for crude oil (60 dollars a barrel), the import of which is prohibited in the EU and which concerns transport by ship.

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In the EU, the stop on imports of these processed products will take effect on Sunday (February 5), and the new “price cap” will apply to transport services to third countries. For the latter, the update of the price list of Russian petroleum products will not start immediately. Representatives of EU national governments have agreed to grant a 55-day transition period for contract and transport reasons, especially with regard to diesel.

The new agreement on the «price cap» broken down by category can be explained by the great difference between refined products, and the work in the technical section of the Council of the EU has also concentrated on this, producing the two different mechanisms for regulating the prices of the raw material Russian energy on the various markets. A written procedure will now be launched to allow the competent ministers to formalize the political agreement reached in the technical session. The goal of all this remains to reduce the Kremlin’s revenues and affect the financing of military maneuvers in Ukraine.

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“We must continue to deprive Russia of the means to pay for the war,” underlines the president of the European Commission, Ursula von der Leyen. «With the G7 we put a ceiling on oil products, cutting revenues to Russia and ensuring stability for world energy markets». The agreement found in Brussels is part of the work carried out, and still being finalized, by the group of the main world economies which includes the United States, Canada, the United Kingdom, Italy, France, Germany and Japan. Until 2014, a group that also included the Russian federation itself, which was suspended following the annexation of Crimea and then left on its own initiative in 2017.

The price list reduction mechanisms for the maximum setting at 100 dollars per barrel for high quality processed products and 45 dollars per barrel for lower quality ones is considered the best solution to avoid supply interruptions.

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