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EU countries agree price caps on Russian oil products Russia-Ukraine war News

Price caps are the latest in a series of Western measures designed to limit Russia’s war chest for the assault on Ukraine.

EU countries have agreed on a European Commission proposal to set price caps on Russian refined oil products, the Swedish presidency of the European Union has said.

“EU ambassadors today approved the price caps on petroleum products ahead of final adoption by the European Council (representing EU member states),” the presidency wrote on Twitter on Friday.

The move was the latest part of an international push to limit President Vladimir Putin’s war chest for the assault on Ukraine by targeting key Russian exports.

The EU in December imposed an embargo on Russian crude oil coming in by sea and – together with its G7 partners – set a $60-dollar-per-barrel cap for exports around the world.

The second EU-wide embargo, on Russian fuel, is set to come into force on Sunday. It will target Russian refined oil products, such as petrol, diesel and heating fuel, arriving on ships.

At the same time, the EU and the G7 group of wealthy democracies have also agreed to impose a price cap on Russian shipments of those products to global markets.

The price caps work by establishing a ceiling for the cost of fuel that can be transported on EU ships.

The Swedish EU presidency said the price caps agreed upon by the bloc’s members were an “important agreement as part of the continued response by the EU and partners to the Russian war of aggression against Ukraine”.

It did not detail the price cap levels for different petroleum products.

The Reuters news agency cited EU diplomats saying the price caps agreed to be $100 per barrel on products that trade at a premium to crude, such as diesel, and $45 per barrel for products that trade at a discount, such as fuel oil. The proposal was that they apply from Sunday.

Poland and Baltic states Latvia, Lithuania and Estonia had pushed for the caps to be set at lower levels to curb Russia’s revenues from fuel, diplomats had said, dragging on talks for days.

Setting the levels is a sensitive issue as the West does not want to cut off Russian supplies to world markets entirely and send global prices soaring.

The Kremlin lashed out at the EU in advance of the embargo coming into force, insisting it will “lead to a further imbalance of the international energy markets”.

“We are taking measures to hedge our interests against the risks associated,” Kremlin spokesman Dmitry Peskov told reporters.

Moscow’s war in Ukraine has provided a harsh wake-up call for the EU, which for years had been reliant on cheap fossil fuels from Russia to power its industries.

Brussels says the embargo on crude oil has seen the bloc cut out some 90 percent of Russian imports, after exceptions were granted for supplies flowing by pipeline to landlocked countries like Hungary.

European Commission President Ursula von der Leyen on Thursday estimated during a visit to Kyiv that the existing price cap on Russian oil was already costing Moscow approximately 160 million euros ($175m) every day.

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