Page 4 - FSUOGM Week 05 2023

FSUOGM COMMENTARY FSUOGM

West prepares to impose price

caps on Russian petroleum

products

The West is preparing to impose price caps on Russian petroleum products imminently,

three months after taking similar action regarding the country’s crude oil exports.

RUSSIA THE EU and the G7 are preparing to impose Secretary Janet Yallen have expressed confidence
price caps on Russian petroleum products early that a final deal will be reached by February 5,
WHAT: next month, in order to ratchet up pressure on when the price caps are due to come into force.
The EU and G7 are Moscow’s revenue stream, three months after The EU will also introduce a ban on most Rus-
hoping to strike a deal introducing a similar cap on Russian crude oil. sian petroleum product imports on the same
on Russian petroleum Details are yet to be agreed, but time is running day, just as it imposed an embargo on the major-
product price caps ahead out before a February 5 deadline. It is also worth ity of crude oil supplies in December.
of a February 5 deadline. examining how effective the caps could prove. The caps will need to be approved unan-
imously by all EU member states before the
WHY: What we know approval of other G7 nations is sought. The bloc’s
The hope is that this The European Commission has proposed that ambassadors had sought to reach a consensus at
will place further strain the EU set a $100 per barrel price cap on pre- a meeting on January 27, but no agreement was
on Moscow’s revenue mium Russian oil products such as diesel and a reached. But there is still time, and the agreement
stream. $45 per barrel cap on discounted products like on a Russian oil price cap was notably made at
fuel oil, Reuters, Bloomberg and others report- the eleventh hour.
WHAT NEXT: ed last week. Meanwhile, Western governments are also
The petroleum product The caps would work by barring Western set to review whether the $60 per barrel cap on
price caps could prove insurance and shipping companies from insur- Russian crude oil should be adjusted. The market
more impactful than ing or carrying cargoes of Russian oil products price for Russian oil has remained significantly
the crude oil price cap unless they were bought at or below the caps. below this cap, and so it has so far done little to
imposed in December. Western officials including US Treasury dampen Russian revenues from oil exports.

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