US and allies agree on two price ceilings for oil products from Russia

The EU and G7 countries will introduce two price ceilings for Russian oil products, the US Treasury said.

The first price ceiling will affect products that trade at a premium to crude oil, and the second – for petroleum products, which are sold at a discount, the agency said in a statement. The restriction should come into effect on February 5, along with the EU embargo.

The fact that countries are planning to introduce two price ceilings for Russian oil products was previously reported by Reuters, citing a representative of the G7. It is more difficult to set a limit on petroleum products than on crude oil, the official said at the time. According to him, there are a lot of types of oil products, and their price often depends on where they are bought, and not on the manufacturer.

Diesel fuel and kerosene are usually sold at a premium to oil, and fuel oil at a discount, the official added.

The crude oil price ceiling, which came into effect on December 5, has achieved its goal of limiting Russia’s export revenues and not destabilizing world supplies, the finance ministers of the countries that supported the price ceiling concluded.

In December, the average cost of Russian Urals oil fell to $50.5 per barrel, the Ministry of Finance reported in operational statistics. In the month since the entry into force of the price ceiling, Russian oil has fallen in price by $16, or 24%. The cost of Urals fell even further in January. Wand the period from December 15 to January 14 was $46.8, the Ministry of Finance reported. For comparison, withmiddle price Brent for this period was $81.5, that is, more by $35, or 43%.

The allies have also rescheduled their assessment of the price ceiling to be in line with market conditions, the Treasury said in a statement.

The G7 countries and the EU have agreed to review the ceiling every two months and set it at least 5% below the current market price. So, in February, countries could tighten sanctions against Russia, but the United States persuaded the allies to postpone this review until mid-March, write Reuters and Bloomberg.


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