Al Mayadeen English

  • Ar
  • Es
  • x
Al Mayadeen English

Slogan

  • News
    • Politics
    • Economy
    • Sports
    • Arts&Culture
    • Health
    • Miscellaneous
    • Technology
    • Environment
  • Articles
    • Opinion
    • Analysis
    • Blog
    • Features
  • Videos
    • NewsFeed
    • Video Features
    • Explainers
    • TV
    • Digital Series
  • Infographs
  • In Pictures
  • • LIVE
News
  • Politics
  • Economy
  • Sports
  • Arts&Culture
  • Health
  • Miscellaneous
  • Technology
  • Environment
Articles
  • Opinion
  • Analysis
  • Blog
  • Features
Videos
  • NewsFeed
  • Video Features
  • Explainers
  • TV
  • Digital Series
Infographs
In Pictures
  • Africa
  • Asia
  • Asia-Pacific
  • Europe
  • Latin America
  • MENA
  • Palestine
  • US & Canada
BREAKING
Araghchi to Grossi: These parties will bear responsibility for the consequences of their actions
Araghchi to Grossi: Iran will respond to any unlawful action by European countries or parties attempting to turn the Agency into a tool for achieving their objectives
Araghchi to Grossi: We urge the Agency to warn against the consequences of any political move against Iran
Araghchi to Grossi: We call on the Agency to highlight Iran’s full cooperation during the upcoming Board of Governors meeting next week
Araghchi to Grossi: We demand that the Agency reflect the facts in a manner that prevents certain parties from exploiting it to advance their political agendas
Iranian Foreign Minister Abbas Araghchi holds a phone call with IAEA Director General Rafael Grossi
Trump envoy Witkoff has sent 'detailed and acceptable proposal' to Iran for nuclear deal; it's in their best interest to accept it: White House Press Secretary Leavitt
Hamas official says Witkoff's position toward group was 'unfair' and shows 'complete bias' to 'Israel'
Hamas official says it has considered Witkoff's proposal acceptable for negotiations, says 'Israel's' response was incompatible with what the group agreed on
Hamas official says group has not rejected Wikoff's proposal for Gaza ceasefire

EU reaches agreement on Russian fuel price caps

  • By Al Mayadeen English
  • Source: Agencies
  • 3 Feb 2023 23:26
  • 1 Shares
6 Min Read

Swedish officials post a tweet on EU ambassadors having approved the price caps on petroleum products ahead of final adoption by the European Council.

  • x
  • Pipes at the landfall facilities of the Nord Stream 2 gas pipeline are pictured in Lubmin, northern Germany, on February 15, 2022 (AP Photo)
    Pipes at the landfall facilities of the Nord Stream 2 gas pipeline are pictured in Lubmin, northern Germany, on February 15, 2022 (AP Photo)

European Union member states agreed Friday on price caps for Russian petroleum products ahead of an international embargo set to go into force over the weekend, Swedish officials said.

"EU ambassadors today approved the price caps on petroleum products ahead of final adoption by the European Council (representing EU member states)," Swedish officials tweeted in the name of their country's role holding the EU presidency.

Read: Price cap on Russian oil exports 'unviable, unenforceable': Expert

The agreement aims to target Russia's key exports and is the latest part of international pressure to limit Russian President Vladimir Putin's reserve of funds for his war in Ukraine.

In December, the EU imposed an embargo on Russian crude oil coming in by sea and agreed with its G7 partners to impose a price cap on Russian oil at $60 per barrel.

However, it was revealed in mid-January that the US was hesitant to approve a lower price cap on Russian oil, despite some EU countries urging for directing further cuts to Russia's energy profits.

According to the report, citing people with knowledge on the matter, Washington will review the price cap on Russia's crude oil only after the G7 adopts price caps on Russian oil derivatives, such as diesel.

The second round of sanctions on diesel, petrol, and heating fuel, arriving on ships by the EU is due to come into effect on February 5th.

The EU and the G7 group have agreed at the same time to impose a price cap on Russian shipments of those products to global markets.  

The price caps set a ceiling for the cost of fuel that can be transported on EU ships.  

The price cap agreed upon was an "important agreement as part of the continued response by EU and partners to the Russian war of aggression against Ukraine," the Swedish EU presidency said without providing details on the price cap levels for various petroleum products. EU officials were poised to brief the media on that later on Friday.

The 27-nation EU had been considering proposals from the European Commission to set a $100-per-barrel limit on more costly products, such as diesel, and $45 on the less expensive ones, like fuel oil.  

Diplomats said Poland and the Baltic states pushed for the price to be lowered to further curb Russia's income.

However, setting the levels is sensitive as the West does not want to cut off Russian supplies to world markets entirely and allow global prices to soar.

Related News

Russia, China in talks to expand Visa-Free tourism travel: Izvestia

EU: China-Russia ties threaten global order

Oil sanctions are a fail for the West, a win for Russia: The Economist

Sales of Russian crude have not decreased as the West had hoped, and shipments have dodged European ports and headed to China and India instead.

In a report by The Economist, it is stated that this actually goes towards the point of the price cap: to keep Russian crude on the market and thus keep the market stable but to curb its profits through the price. 

This in turn offers buyers negotiating power, considering that the longer export routes also pose higher freight costs which Russia has to compensate. 

It is argued that Russian oil now sells at a 38% discount per price-reporting agencies, which Treasury Secretary Janet Yellen, who helped devise the price cap, sees as a success that the cap is working effectively. 

These price-reporting agencies haven't applied their techniques to areas where Russian oil is sold through channels that they are not aware of. For instance, European refiners report to these price-tracking agencies, but Indians do not.

Rates for ferrying oil from Russia to Asia are private and thus not available for these price-reporting agencies to evaluate. Hence, the discounts that Western analysts refer to are actually inaccurate. 

The Economist also adds that it is difficult to evaluate real pricing because everyone pretends the prices are low.

Russian export, as a result, has become less dependent on Western shipping and financing, which helped evade the sanction somewhat. More than half of western Russian crude was managed by a European shipping or financing firm, but that percentage has decreased to 36%.

What's in store for the Feb. 5 sanctions?

As of February 5, Europe will and can no longer purchase Russian diesel and will enforce the price cap on its shipping and insurance companies. 

Although Russia "won't find a replacement for their EU buyers," both China and India pose as possible candidates even though they have refineries of their own, according to reports. 

Moreover, a majority of Russian refined products amounting to a third of Russia's oil-export revenues could raise global prices even higher as they would go unsold.

But here's the twist: These outcomes may fade with time since Russia would make up for the loss of refined with crude instead. With that and with time, the West will find itself having to resort to Chinese and Indian diesel supply, which will come from Russian crude. 

That proves that Western-imposed sanctions will eventually become ineffective for the economy and the war in Ukraine.

Bloomberg revealed in mid-January that the US is hesitant to approve a lower price cap on Russian oil, despite some EU countries urging for further cuts to Russia's energy profits.

According to the report, which cited people with knowledge of the issue, Washington will review the price cap on Russia's crude oil only after the G7 adopts price caps on Russian oil derivatives, such as diesel.

  • Ukraine
  • European Union
  • Russia
  • Fuel prices
  • Price cap
Russia & NATO

Russia & NATO

As the Draconian Western-led sanctions on Russia exacerbate the economic crisis worldwide, and as Russian troops gain more ground despite the influx of military aid into Ukraine, exposing US direct involvement in bio-labs spread across Eastern Europe and the insurgence of neo-Nazi groups… How will things unfold?

Most Read

US judges quietly consider private security amid Trump tensions

US judges quietly consider private security amid Trump pressures

  • US & Canada
  • 25 May 2025
President Donald Trump and Israeli Prime Minister Benjamin Netanyahu arrive to a news conference in the East Room of the White House, Tuesday, Feb. 4, 2025, in Washington (AP)

Rift widens: Trump, Netanyahu clash in heated phone call over Iran

  • Politics
  • 26 May 2025
An Israeli army vehicle moves in the Gaza Strip as seen from southern occupied Palestine, Thursday, May 29, 2025 (AP)

Hamas rejects Witkoff ceasefire plan, says alters terms

  • Politics
  • 29 May 2025
Spokesperson for the Yemeni Armed Forces, Brigadier General Yahya Saree, announces a new operation against Ben Gurion Airport on May 29, 2025 (Yemeni Military Media)

Yemen announces successful hypersonic missile strike on Ben Gurion

  • Politics
  • 30 May 2025

Coverage

All
War on Gaza

Read Next

All
MIT bans class president who gave pro-Palestine speech
US & Canada

MIT bans class president over pro-Palestine speech

Arab ministers condemn Israel 'ban' on planned West Bank visit
Politics

Arab ministers condemn Israeli ban on planned West Bank visit

Major General Hu Gangfeng, Vice President, National Defense University, People's Liberation Army, China, leaves after a panel discussion during the 22nd Shangri-La Dialogue summit in Singapore, Saturday, May 31, 2025. (AP Photo/Anupam Nath)
Politics

China blasts Hegseth, calls US top 'troublemaker' in Asia-Pacific

US activists demand shutdown of Musk's 'dirty' supercomputer: Reports
Technology

US activists demand shutdown of Musk's 'dirty' supercomputer: NBC News

Al Mayadeen English

Al Mayadeen is an Arab Independent Media Satellite Channel.

All Rights Reserved

  • x
  • Privacy Policy
  • About Us
  • Contact Us
  • Authors
Android
iOS