The EU may limit the price of russian diesel fuel to $100/barrel

The European Union is considering limiting the price of export russian diesel fuel at the level of $100/barrel.

The European Commission is considering a plan to limit the price of diesel fuel from russian federation after the G7 countries proposed a price range based on the existing cap on the price of russian oil.

The Union plans to ban the import of russian oil products from February 5, as part of sanctions for russia’s invasion of Ukraine, Bloomberg reports. The European Union and the G7 want to introduce price restrictions on russian exports of diesel fuel to third countries, but the price of oil is variable and volatile.

According to Bloomberg, a limit of $100/barrel may be applied to russian diesel fuel. The $45/barrel cap would apply to discounted products such as fuel oil. The final figure may change, depending on the results of negotiations with EU member states.

Negotiations on price restrictions are complicated by the fact that the EU is trying to balance two competing goals: to limit russian revenues and to curb the sharp rise in prices or the shortage of key products on the world market.

Discussions at the level of diplomats will begin on January 27 and will last several days.

By comparison, diesel futures in northwest Europe are currently trading at $130/barrel, according to ICE Futures Europe.

Russian supplies are already trading at a big discount compared to supplies from other countries. Therefore, the impact on the income of sellers from russia may not be as significant as expected.