EU Agrees to Expand Sanctions on Russian Oil Industry
The European Union agreed to cap the sales price of premium Russian petroleum products such as diesel at $100 a barrel and limit low-value ones such as fuel oil to $45 a barrel, clearing the way for Western allies to expand sanctions on Russia’s oil industry, according to people familiar with the deal.
Following the unanimous agreement between the 27 EU member states, the rest of the Group of Seven advanced democracies, along with Australia, are expected to affirm the deal.
Just as with the $60 a barrel price cap on Russian crude the U.S. and its allies imposed last year, the agreement will bar Western firms from handling Russian oil products unless they are sold below the set prices. The sanctions aim to keep Russian oil available on global markets to keep prices steady, while also reducing the Kremlin’s revenue in response to its invasion of Ukraine.
The price limits on Russian petroleum products will kick in on Sunday, the same day that the EU will bar the import of Russian products into the bloc.
European officials approved the two cap levels, initially offered by the bloc’s executive arm last week, with relatively little debate. Previous deliberations on sanctioning Russia’s oil industry had pitted countries such as Poland, who wanted deeper penalties on Russia, against the U.S. and others who worried about harming the global economy.
“We must continue to deprive Russia of the means to wage war against Ukraine,”
Ursula von der Leyen,
the president of the European Commission, said in a statement on social media. “With the G-7 we are putting price caps on these products, cutting Russia’s revenue while ensuring stable global energy markets.”
Traders and shipping executives don’t expect the sanctions to cause immediate disruption in energy markets. European diesel stores have ballooned in recent months as companies stockpiled fuel ahead of the sanctions. Stockpiles of gas oil—a kind of oil that includes diesel—in a northwest European storage hub stand at their highest level since July 2021, consulting firm Insights Global said Thursday,
European fuel imports from the Middle East, India and China are picking up. Russian petroleum products meanwhile are starting to find new markets in North Africa and Latin America, shipping data show.
Still, some analysts said Europe could face difficulties fueling its cars, factories and farms without Russian diesel in the future.
The price cap on Russian crude, set at $60 a barrel, has had a largely muted impact on global markets since going into place on Dec. 5. That has encouraged Western officials that their novel sanctions have been effective, though it has also prompted some analysts and Eastern European officials to push to lower the price cap on crude. G-7 officials agreed last month to review the $60 a barrel crude cap in March. Brent crude, a global benchmark, traded at around $80 a barrel on Friday.
Write to Andrew Duehren at [email protected], Laurence Norman at [email protected] and Joe Wallace at [email protected]
Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8
The European Union agreed to cap the sales price of premium Russian petroleum products such as diesel at $100 a barrel and limit low-value ones such as fuel oil to $45 a barrel, clearing the way for Western allies to expand sanctions on Russia’s oil industry, according to people familiar with the deal.
Following the unanimous agreement between the 27 EU member states, the rest of the Group of Seven advanced democracies, along with Australia, are expected to affirm the deal.
Just as with the $60 a barrel price cap on Russian crude the U.S. and its allies imposed last year, the agreement will bar Western firms from handling Russian oil products unless they are sold below the set prices. The sanctions aim to keep Russian oil available on global markets to keep prices steady, while also reducing the Kremlin’s revenue in response to its invasion of Ukraine.
The price limits on Russian petroleum products will kick in on Sunday, the same day that the EU will bar the import of Russian products into the bloc.
European officials approved the two cap levels, initially offered by the bloc’s executive arm last week, with relatively little debate. Previous deliberations on sanctioning Russia’s oil industry had pitted countries such as Poland, who wanted deeper penalties on Russia, against the U.S. and others who worried about harming the global economy.
“We must continue to deprive Russia of the means to wage war against Ukraine,”
Ursula von der Leyen,
the president of the European Commission, said in a statement on social media. “With the G-7 we are putting price caps on these products, cutting Russia’s revenue while ensuring stable global energy markets.”
Traders and shipping executives don’t expect the sanctions to cause immediate disruption in energy markets. European diesel stores have ballooned in recent months as companies stockpiled fuel ahead of the sanctions. Stockpiles of gas oil—a kind of oil that includes diesel—in a northwest European storage hub stand at their highest level since July 2021, consulting firm Insights Global said Thursday,
European fuel imports from the Middle East, India and China are picking up. Russian petroleum products meanwhile are starting to find new markets in North Africa and Latin America, shipping data show.
Still, some analysts said Europe could face difficulties fueling its cars, factories and farms without Russian diesel in the future.
The price cap on Russian crude, set at $60 a barrel, has had a largely muted impact on global markets since going into place on Dec. 5. That has encouraged Western officials that their novel sanctions have been effective, though it has also prompted some analysts and Eastern European officials to push to lower the price cap on crude. G-7 officials agreed last month to review the $60 a barrel crude cap in March. Brent crude, a global benchmark, traded at around $80 a barrel on Friday.
Write to Andrew Duehren at [email protected], Laurence Norman at [email protected] and Joe Wallace at [email protected]
Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8
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