US Treasury Secretary Janet Yellen announced on Friday that the Group of Seven industrialized countries will impose a price ceiling on refined Russian oil products such as diesel and kerosene as part of a coalition that includes Australia and a tentative agreement from the European Union.
The ban is comparable to price caps imposed on Russian oil exports, with the purpose of decreasing the financial resources available to Russian President Vladimir Putin to fight the almost year-long war in Ukraine.
“Today’s agreement builds on the price cap on Russian crude oil exports that we set in December and helps advance our goals of limiting Russia’s key revenue generator in funding its illegal war while promoting stable global energy markets,” Yellen said in a statement.
Russian Oil Price Cap
On Friday, the alliance announced price caps of $100 per barrel for items that trade at a premium to crude, primarily diesel, and $45 per barrel for products that trade at a discount, including fuel oil and naphtha. This corresponded to the levels proposed by the European Commission.
The price limitations on petroleum items will go into effect on February 5, according to the coalition’s statement. Participating countries stated that “time-limited exceptions” will be made for products put onto a vessel prior to February 5.
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What Is Not Allowed?
The EU prohibition prohibits EU ships from transporting Russian-origin petroleum products unless the products are purchased at or below the coalition’s agreed-upon price threshold.
The rule also applies to companies that offer technical, brokerage, or financial help, such as shipment insurance for Russian refined products.
If a vessel traveling under a third-party flag purposefully transports Russian oil at or over the price cap, EU operators will be barred from insuring, financing, or servicing the vessel for 90 days after the cargo is discharged.
EU-flagged vessels will face penalties under national law, while the EU is working on a penalty of 5% of global turnover for corporations that violate EU sanctions.
The G7 coalition said it would review the December 5 crude oil price cap in March. Decisions on any changes would be driven by technical analysis by groups such as the International Energy Agency while factoring in the impact on Russian oil revenues.