EU, G7 partners agree on price cap on Russian petroleum products amid Ukraine war; Will it affect India?

President of the European Commission, Ursula von der Leyen
Image source: AP President of the European Commission, Ursula von der Leyen (L) and Russian President Vladimir Putin (R).

EU price cap on Russian petroleum: In a major development, the European Union, the international G7, and the price cap alliance on Saturday adopted further price caps for maritime Russian petroleum products, including diesel and fuel oil. Specifically, the Price Cap Coalition is made up of Australia, Canada, the European Union, Japan, the UK, and the US.

The latest action is in line with a series of sanctions imposed by Russia against its neighbor Ukraine, according to a statement issued by the grouping of 27 nations. According to the statement, the decision will further hit Russia’s revenue and reduce the war-torn nation’s ability to wage war. At the same time, it underlined that the measure would help stabilize global energy markets, thereby benefitting countries around the world.

Notably, the European Union and the West have imposed a series of sanctions against Moscow ever since it launched a relentless war of words against Kyiv last year. Meanwhile, the President of the European Commission, Ursula von der Leyen, announced the latest measures, saying: “We are making Putin pay for his brutal war. Russia is paying a heavy price, as our sanctions destroy its economy.” are, throwing it back.” a generation.”

Watch the full video of the President of the European Union here:

“Today, we are further increasing the pressure by imposing an additional price cap on Russian petroleum products. This has been agreed with our G7 partners and will further reduce Putin’s resources to wage war. At the end of the year, by February 24, we aim to implement the 10th package of sanctions.”

Premium-to-crude products will be capped at $100 a barrel

Two price levels have been set for Russian petroleum products: one for “premium-to-crude” petroleum products, such as diesel, kerosene and gasoline, and another for “discount-to-crude” petroleum products, according to a top EU official. Products for “crude” petroleum, such as fuel oil and naphtha, reflect market dynamics. The maximum price for premium-to-crude products would be $100 per barrel and the maximum price for discount-to-crude would be $45 per barrel.

The price cap on petroleum products will be implemented from Sunday, February 5. This includes a 55-day wind-down period for maritime Russian petroleum products purchased above the value limit, provided it is first loaded onto a vessel at the port of loading. According to the statement, unloaded at the final port of destination before 5 February 2023 and 1 April 2023.

India imports 85% of its crude oil requirement.

Significantly, India is the third largest oil consuming and importing country in the world. It imports 85 per cent of its crude oil requirement. Crude oil is converted into fuels such as petrol and diesel in refineries. However, since war broke out between Russia and its neighboring country last year, the West and Europe have imposed tighter sanctions on its energy. This resulted in Russia offering more concessions to its oldest ally India.

Will this affect India’s oil market?

Amid the ongoing war between Russia and Ukraine, India is increasing its trade cooperation with the East, especially crude oil. According to the commerce ministry, Moscow has moved up to the fourth position in the list of top 10 merchandise import source nations in April-December 2022. current financial year.

The Indian government has been strongly defending its trade with Russia, saying it must get oil from where it is cheapest. The government had earlier indicated that oil companies would continue to buy oil from Russia outside the price cap.

External Affairs Minister S Jaishankar told the Rajya Sabha on December 7 that Indian refiners would continue to look for the best deals in the interest of the country. “We do not ask our companies to buy Russian oil. We ask our companies to buy oil (based on) what is the best option they have. Now, it depends on what the market bounces back,” he had said while replying to clarifications sought by lawmakers on his own motto statement on foreign policy. Moreover, at several international fora, New Delhi has supported Moscow despite being brutally trolled by the EU and the West. Therefore, it is unlikely that the latest measure will affect India’s oil market.

Read also: Putin’s message to Ukraine: “Russia’s victory in Kyiv is inevitable”

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