G-7 intends to set two price caps on Russian oil products

The Group of Seven (G-7) intends to set two price caps on Russian oil products. The first one will be aimed at products that trade at a premium to the price of crude oil, and the second at those that trade at a discount.

In addition to the embargo of the European Union (EU) on Russian oil imports, a price cap on its sale has been introduced since early December 2022. The cap was set at $60 per barrel. These sanctions were supported by a coalition of countries including Australia, Canada, Japan, the United States, and the EU countries. It is also planned to introduce price limits on Russian oil products from February 5.

However, these new restrictions are more complicated and time-consuming due to several reasons. First, the price of oil products most often depends on where they are purchased rather than produced. Second, there are quite a few types of these products, and their prices differ from each other.

It is worth noting that Russia has committed not to sell crude oil to countries that support the restrictions. A similar step with oil products might significantly complicate the situation for Europe.

According to Refinitiv, Europe remains dependent on diesel produced in Russia. In December, it accounted for nearly 50% of the continent's total imports.