Russian Petroleum Products: EU, G7 and Australia agree price caps | War in Ukraine

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Russian oil products: EU, G7 & Australia agree price cap | War in Ukraine

Moscow believes that the embargo “will further unbalance international energy markets”. (File photo)

The G7 powers and Australia on Friday, following an EU deal earlier in the day, reached an agreement on a cap on the price of Russian petroleum products, two days before the start of a European embargo on these products.

In a joint statement, the partner countries announced that they had reached an agreement on a price ceiling for Russian petroleum products transported by ship.

It must be implemented from Sunday or very soon after, specifies the text signed by the EU, Germany, Australia, the United Kingdom, Canada, France , Italy, Japan and the United States.

This price cap should prevent Russia from profiting from the war in Ukraine and support stability in global energy markets, they further note.

The agreement was enabled by the consensus reached earlier today by the 27 countries of the European Union and announced on Twitter by Swedish officials on behalf of their country which holds the rotating presidency of the European Union. ;Union.

According to them, this is an important agreement that is part of the continued response of the European Union and its partners to the Russian aggression war against Ukraine.

The agreement should make it possible to limit the financing of Russia's illegal war in Ukraine, welcomed for her part the American Secretary of the Treasury Janet Yellen in a press release.

The agreement includes a ceiling price of $100 per barrel for more expensive products like diesel and another of $45 per barrel for less refined products like fuel oil .

This agreement corresponds to the proposals made by the European Commission.

The ceilings set relate to Russian petroleum products transported by ships from partner countries. #x27;EU to these products.

With the G7, we are setting price caps on these products, to reduce Russian incomes while ensuring the stability of the global energy market, said European Commission President Ursula von der Leyen.

We must continue to deprive Russia of the means to wage war on Ukraine, she also said, recalling the entry into force on Sunday of the embargo on Russian petroleum products exported by sea. According to other diplomatic sources, Poland and the Baltic States were demanding an even lower level of the cap to further penalize Moscow.

The equation is tricky, however, with the aim – as with the crude oil cap passed in December – to restrain Russia's revenue while ensuring it continues to fuel the world market so as not to destabilize trade and cause a surge in prices.

The diversity of the petroleum products concerned, whose selling price varies enormously from one market to another, also complicates the situation.

The European embargo on Russian refined products will further unbalance international energy markets, Russian presidential spokesman Dmitry Peskov warned on Friday, assuring that Moscow was taking measures to cover [its] interests.

According to an agreement reached in December by the EU, the G7 powers and Australia, these cap levels must be adopted before the European embargo on products comes into force on Sunday. Russian refined products exported by sea, to prevent Moscow easily finding new buyers elsewhere at current prices.

Above the fixed cap, it will be prohibited for companies based in the EU, the G7 or Australia to provide the services allowing the maritime transport, including insurance (with G7 countries insuring some 90% of global cargo).

Following the lead of the United States and Canada, the EU has already banned since December 5 on its soil almost all deliveries of Russian oil transported by sea .

To this was added simultaneously a price cap mechanism approved by the EU, the G7 and Australia, providing that, in the world , only Russian crude sold at a maximum of 60 dollars per barrel can continue to be delivered. Beyond that, companies based in these countries can no longer provide their services (trading, freight, insurance, shipowners, etc.) under penalty of sanctions.