According to the Swedish EU presidency, EU member states have approved a European Commission proposal to establish price ceilings on Russian refined oil products.
The price limitations on petroleum goods were authorized by EU ambassadors today before being formally adopted by the European Council (representing EU member states), according to a tweet from the presidency on Friday.
The action was the most recent component of a global campaign to target important Russian exports in order to reduce President Vladimir Putin’s war fund for the assault on Ukraine.
The EU and its G7 allies set a $60 per barrel quota for global exports in December and put an embargo on Russian crude oil entering by sea.
On Sunday, the second EU-wide embargo, affecting Russian fuel, is scheduled to take effect. It will target Russian refined oil goods that arrive on ships, such as gasoline, diesel, and heating oil.
At the same time, a price ceiling will be imposed on Russian shipments of such products to international markets by the EU and the G7 group of affluent democracies.
The price caps function by putting a cap on how much gasoline can cost to transfer on EU ships.
The price limitations adopted by the EU’s members, according to the Swedish EU president, are “an significant agreement as part of the sustained response by EU and partners to the Russian war of aggression against Ukraine.”
The thresholds of the price caps for certain petroleum products were not specified.
According to EU diplomats quoted by the Reuters news agency, the price limits reached were $100 per barrel for goods that trade at a premium to crude, such diesel, and $45 per barrel for those that trade at a discount, like fuel oil. The suggestion was that they start applying on Sunday.
According to diplomats, Poland and the Baltic republics Latvia, Lithuania, and Estonia pushed for the caps to be set at lower levels in order to reduce Russia’s gasoline earnings, which prolonged negotiations for days.
Setting the thresholds is a delicate matter because the West does not want to completely cut off Russian supplies to global markets and drive up costs.
Before the embargo went into effect, the Kremlin attacked the EU, claiming that it would “lead to a worsening imbalance of the world energy markets.”
Dmitry Peskov, a spokesman for the Kremlin, said reporters that “we are taking measures to hedge our interests against the dangers linked.”
The EU, which for years had relied on cheap fossil resources from Russia to power its industries, has received a brutal wake-up call as a result of Moscow’s war in Ukraine.
After exceptions were made for goods traveling by pipeline to landlocked nations like Hungary, Brussels claims that the bloc has eliminated about 90% of Russian imports.
During a visit to Kyiv on Thursday, President of the European Commission Ursula von der Leyen calculated that the current price cap on Russian oil was already costing Moscow some 160 million euros ($175 million) per day.
