EU countries agreed on a proposal from the EU Commission. This provides a price cap for Russian petroleum products.
The EU, together with international partners, wants to force Russia to sell petroleum products such as diesel to buyers in other countries below market price.
Price cap of $100 per barrel
A deal reached by government representatives on Friday calls for an initial price limit of US$100 (159 litres) per barrel, as several diplomats from the German Press Agency in Brussels confirmed. This is currently equivalent to around 91 euros.
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 ceiling price of $45 (€41) per barrel will be applied initially for low quality products.
To enforce the price cap, it should be regulated that services important to the export of Russian petroleum products in the future can be provided with impunity only if the price of exported oil does not exceed the ceiling price. Western shipping companies can use their ships to continue shipping Russian oil products to third countries like India. The regulation should also apply to other essential services such as insurance, technical assistance and financing and brokerage services.
Goal: To prevent price increases, to relieve third countries
The purpose of the price ceiling is to prevent new price increases in international markets and thus to relieve third countries. It should also be ensured that Russia no longer benefits from price increases for petroleum products and thus fills the war chest. According to the estimates of the European Commission, the upper price cap for Russia’s crude oil shipments to third countries, introduced last December, costs Russia about 160m euros per day.
The price ceiling is intended to complement the EU’s oil embargo on Russia in June. Among other things, this ensures that the purchase, import or transmission of crude oil and certain petroleum products from Russia to the EU is prohibited. The restrictions will apply to petroleum products such as crude oil from December 5 and diesel from Sunday. However, there are some exceptions, for example Hungary.
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