EU countries agree on new price cap for Russian oil

EU member states have agreed to introduce a price cap on refined oil products from Russia. Australia and the G7 countries, including the United States and Japan, also agreed. A price cap had previously also been introduced for Russian crude oil because of the war in Ukraine.

The maximum price for Russian premium oil products such as diesel was set at $100 (92 euros) per barrel, an insider in Brussels reported. For "lesser" products such as heating oil, it is $45 (€41). As a result, the G7 countries and Australia said they will also apply these maximum prices.

The G7 and the EU had already agreed in December on a price cap of $60 (55 euros) per barrel of crude oil from Russia. As they did late last year, the countries hope to prevent Russia from earning much from oil exports. Therefore, the new sanctions measure in the European Union will take effect as early as next Sunday, according to the European Commission's proposal.

The insider in Brussels called it a "balanced, restrictive measure that keeps the price of oil and its derivatives low enough to reduce Russian revenues while ensuring access for third countries." In addition, Poland and the Baltic states had called for lower prices to further reduce revenues for Russia.

Under both sanctions measures, Western insurance and shipping companies were prohibited from insuring or transporting Russian crude oil and petroleum products unless they are purchased at or below the established price ceiling.

Furthermore, there will be a 55-day transition period for sea-borne Russian oil products bought and shipped before Sunday and 45 days for Russian crude oil, according to Reuters.

In general, western insurers and shipowners play an important role in this trade.