The European Commission announced the introduction of a price ceiling for petroleum products from the Russian Federation from February 5

The EU and the G7 countries have set a ceiling on the price of maritime transport of oil products of Russian origin, such as diesel fuel and heating oil, the decision complements the EU’s total ban on the import of marine crude oil and oil products, reported on the website of the European Commission (EC).

The EC announced the introduction of a price ceiling for Russian energy resources following the US Treasury. Head of Department Janet Yellen formerly signed the decision, according to which the price ceiling for oil products from Russia begins to operate from February 5, the restrictions will be set at $100/bbl. (about $730/t) and $45/bbl. (about $330/t) for diesel and fuel oil, respectively.

“Today, together with our G7 partners, we set additional price caps for shipping Russian oil products (such as diesel and fuel oil). This decision will further hurt Russia’s revenues and reduce its ability to wage war in Ukraine,” the EC tweeted.

The imposed restrictions, as noted on the EC website, include a 55-day grace period. It will apply to Russian oil products purchased by sea transport at a price above the limit, provided that they are loaded onto the ship before February 5, 2023 and unloaded at the final port of destination before April 1, 2023.

The price cap coalition that approved the new rules includes Australia, Canada, the EU, Japan, the UK and the US.

In 2022, after the strengthening of anti-Russian sanctions, the EU, the US and the UK imposed restrictions on the supply of Russian oil products, and then decided to limit fuel prices. From December 5, 2022, a price ceiling imposed by unfriendly countries on offshore oil supplies from the Russian Federation is in effect. At that time, a ceiling was set on Russian oil at $60/bbl.

At the end of January, the European Commission proposed the structure of marginal prices for oil products from Russia. The parties agreed to introduce two price limits – for oil products that are sold at a premium to Brent (for example, diesel), and for those that are sold at a discount (fuel oil). Bloomberg sources reported on January 26, 2023 that the EU is considering limits of $100/bbl. for diesel (about $730/t) and $45/bbl. for fuel oil (about $330/t), European countries agreed on them this week. At the same time, Poland and the Baltic countries insisted that the price ceiling be even lower.

Following the introduction of the oil price ceiling, Russian President Vladimir Putin signed a retaliatory decree on December 27, 2022, according to which Russia will not supply oil if the contracts explicitly or implicitly provide for a price cap mechanism. It is emphasized that this measure is applied at all stages of deliveries to the final buyer. The document entered into force on February 1.