On Sunday, the European Union's ban on Russian imports of diesel and other refined petroleum products went into effect. This is just one aspect of the G7's effort to limit funding for Russian President Vladimir Putin's war machine. The G7, which is composed of the United States, Canada, France, Germany, Italy, Japan, and the United Kingdom, has imposed a price cap of $100-per-barrel on Russian diesel sales for non-Western countries. This is enforced by a requirement that shippers and insurers, which are largely based in the West, handle only oil products priced below the limit. This follows a previously-imposed price cap of $60-a-barrel on Russian crude oil shipments.
The purpose of the price caps is to prevent a spike in diesel prices, which have already been elevated due to Russia's invasion of Ukraine, leading to higher costs for everyday goods transported by diesel-fueled trucks. To make up for the lack of diesel imports, Europe will have to look to other countries such as the U.S., the Middle East, and India.
The G7 also stated they are prepared to review and adjust the maximum price as needed. In March, the Price Cap Coalition will undertake a review of the price cap on crude oil to ensure that it continues to meet its goals of diminishing Russia's revenue while supporting energy market stability.
The European Union, as part of the G7, has imposed a ban on Russian imports of diesel and other refined petroleum products, along with a price cap of $100-per-barrel on Russian diesel sales for non-Western countries. The purpose of the ban and price caps is to limit the funding for Russian President Vladimir Putin's war machine, while preventing a spike in diesel prices due to Russia's invasion of Ukraine. To make up for the lack of diesel imports, Europe must now look to other countries such as the U.S., the Middle East, and India. The G7 is prepared to review and adjust the maximum price as needed, with a review of the price cap on crude oil scheduled for March.