The European Union is imposing a ban on the import of Russian diesel fuel
FRANKFURT, Germany (AP) — Europe on Sunday imposed sanctions on Russian diesel fuel. And other refined oil products, reducing energy dependence. On Moscow and seeking to further cut the Kremlin’s fossil fuel earnings. As punishment for its invasion of Ukraine.
The ban comes with a price cap agreed by the Group of Seven Allied Democracies. The goal is to allow Russin diesel to flow to countries like China and India and avoid suddena price hikes. That could hurt consumers worldwide while cutting into Moscow’s budget and war-financing profits. Diesel is the key to economy as it is used to power cars. , trucks carrying produce, farm equipment and factory machinery. Demand recovery and refining capacity constraints. After the COVID-19 pandemic have pushed up diesel prices. Contributing to inflation in other commodities globally.
The new sanctions have created uncertainty about prices as the 27-nation. European Union finds new supplies of diesel from the United States. The Middle East and India to replace those from Russia. Which at one point supplied 10% of Europe’s total diesel demand. These are longer journeys than the available tankers stretch, from Russian ports.
Prices are also likely to rise as the economy recovers. After the end of strict COVID-19 restrictions. Reviving demand from China. A price cap of $100 per barrel for diesel. Jet fuel and gasoline will be enforced by barring insurance. And shipping services from handling diesel priced above the threshold. Most of these companies are located in western countries.
It follows a $60-per-barrel cap on Russian crude. That went into effect in December and is supposed to work similarly. Both diesel and oil can be tightened after caps.
“Once we have this price cap set, we can suppress Russian prices and deny them. Deny (President Vladimir) Putin money for his war without raising prices. To Western economies and developing economies,” said Thomas O’Donnell. is going to hurt,” said Thomas O’Donnell. A global fellow with the Washington-based Wilson Center.
The diesel price cap won’t bite immediately. Because it was determined what Russian diesel trades for. Russia’s main problem now will be finding new customers, not avoiding price caps. Yet, the cap aims to prevent Russian profits from. Sudden price increases in refined oil products.
Analysts say the initial price jolt may be due to sorting out market changes. But they say the ban should not cause prices to rise. If the cap works as intended and Russian diesel flows to other countries. Diesel fuel prices at the pump were flat at 1.80 euros per liter ($7.37 per gallon) as of Jan. 30. According to the weekly oil market report issued. By the European Union’s executive commission. Pump prices in Germany, the EU’s largest economy, fell 2.6 cents to 1.83 euros a liter ($7.48 a gallon) as of Jan. 31.
The ban provides for a 55-day grace period to load diesel on tankers before Sunday. A move aimed at avoiding the export market. EU officials say importers have had time to adjust since the ban was announced in June.
Russia earned more than $2 billion from diesel sales to Europe in December. Alone as importers appeared to stock up on excess purchases ahead of the ban.
Europe has already banned Russian coal and most crude oil. While Moscow has halted most shipments of natural gas.
Associated Press writer Jeffrey Schaefer contributed from Paris.
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