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As of Sunday, no Russian oil products can be imported into the European Union, per the latest sanction hit of Brussels against Moscow.
The embargo has been combined with a price cap, agreed upon with the G7 in the same way that the EU and the G7 coordinated the price cap on Russian crude last year.
The price caps were agreed at $100 per barrel of diesel, which trades at a premium to crude oil, and $45 per barrel of fuel oil and other oil products that trade at a discount to crude oil. The price cap applies to Russian fuel cargoes shipped on vessels owned by companies based in the EU or G7.
There is some concern among analysts that the end of Russian fuel deliveries will push prices in the EU higher, but the EU is hoping to avoid such a development by switching to new suppliers, mostly from the Middle East.
Some have warned that the fuel embargo will have a more disruptive effect on energy markets than the crude oil embargo that went into effect on December 5 last year.
Russia, in the meantime, is on track to export more refined products this month than it exported in January, according to traders and cargo data, reported by Reuters.
Exports of low-sulfur diesel and gasoil from Russian ports on the Black Sea and the Baltic Sea are set for monthly growth of between 5 percent and 10 percent to a combined 4.3 million tons, the data showed.
Yet Russian fuel exporters are facing challenges, such as a shortage of tankers to carry their products and the risk of port closures due to stormy weather. The price caps, on the other hand, could affect refiners’ margins and prompt them to reduce production.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.