G7 countries and Australia agree to cap prices on derivatives of Russian crude oil

The G7 countries announced this Friday that they have reached an agreement to set a cap on the price of Russian oil products, including diesel, in retaliation for the government of Vladimir Putin for the war in Ukraine.

The G7 agreed to fix the maximum price of products premiumsuch as diesel, at $100 per barrel and $45 for other derivatives, according to a joint statement.

The new measures will enter into force this Sunday, according to a statement from the G7, made up of France, Germany, the United Kingdom, Italy, the United States, Canada and Japan.

The G7 seeks to prevent Russia from benefiting from the conflict in Ukraine

The agreement contemplates a grace period that will allow exceptions for transactions that include products derived from Russian oil that have been loaded on transport vessels before this Sunday.

The countries of the European Union, for their part, also announced this Friday an agreement to set ceilings on the price of diesel and other derivatives of Russian oil, in line with what the G7 delimited.

The new price cap comes just over a month after both the G7 and the EU set a ceiling of $60 a barrel for Russian crude.

With the caps on the price of petroleum products, the G7 seeks to prevent Russia from benefiting from the conflict in Ukraine, “support stability in world energy markets and minimize the negative economic effects” of the war in Eastern Europe, the statement detailed.

Russia has already warned that the embargo will further disrupt hydrocarbon markets

The US Treasury Secretary, Janet Yellen, welcomed the measure in a statement and said it will help “limit Russian revenues with which they finance the illegal war.”

Yellen said that since the initial agreement was announced in December, “progress” has already been seen.

“High-ranking officials of the Russian government have admitted on multiple occasions that the cap on the price of Russian crude is cutting off their main source of income,” stressed the person in charge of the Treasury portfolio.

Russia already warned this Friday that the EU embargo on imports of crude oil derivatives from his country will further alter world hydrocarbon markets, although he assured that, at least for now, it does not plan to cut the production of its refineries. .

In 2022 Russia produced 276 million tons of crude oil derivatives, 3.5% less than the previous year, according to the Russian federal statistics agency, Rosstat.

In particular, gasoline production increased by 3.6% and was 42.3 million tons, while diesel production grew by 5.4% and totaled 84.7 million tons.

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