$100 a barrel
EU states cap price for Russian diesel
2/3/2023, 8:11 p.m
Numerous states want to limit the profit that Russia makes from the export of oil products such as diesel. Brussels is now saying that the upper limit per barrel should be USD 100 in the future. Russia could lose more than a hundred million dollars a day.
Together with international partners, the EU wants to force Russia to sell petroleum products such as diesel below the market price to buyers in other countries. An agreement reached by government officials provides for a price cap of initially USD 100 per barrel (159 litres), as confirmed by several diplomats in Brussels. That’s the equivalent of around 91 euros at the moment. For comparison: on international exchanges, a barrel of diesel for delivery to Europe was last traded at prices equivalent to around 100 to 120 euros. A price ceiling of initially $45 (€41) per barrel will apply to lower-quality products.
In order to enforce the price cap, it should be regulated that in future services important for the export of Russian oil products may only be provided with impunity if the price of the exported oil does not exceed the price cap. Western shipping companies could use their ships to continue transporting Russian oil products to third countries such as India. The regulation should also apply to other important services such as insurance, technical assistance and financing and brokerage services.
The aim of the price cap is to prevent new price jumps on the international markets and thus also to relieve third countries. In addition, it should be ensured that Russia no longer benefits from price increases for oil products and can thus fill its war chest. According to estimates by the EU Commission, the upper price limit for Russian crude oil deliveries to third countries, which was introduced last December, costs Russia around 160 million euros a day.
The price cap is intended to complement the oil embargo against Russia that the EU decided in June. Among other things, this provides for a ban on the purchase, import or forwarding of crude oil and certain petroleum products from Russia to the EU. The restrictions apply to crude oil from December 5 and to petroleum products such as diesel from Sunday. However, there are some exceptions, for example for Hungary.