Nearly a year after the start of the Russian offensive against Ukraine, the waves of EU sanctions against Russia are connected. This Sunday, February 5, no EU country will be able to import refined oil products (diesel fuel, gasoline, heating oil, kerosene, etc.) from Russia by sea. However, there is a temporary exemption for pipeline imports of crude oil to Member States that, due to their geographic location, are dependent on supplies from Russia and have no viable alternative.
Although the European Parliament voted for a total ban on diesel vehicles in 2035, this fuel derived from the refining of crude oil is currently the most commonly used fuel in European vehicles. In France, 15% of new registrations in 2022 are based on a diesel engine, hence some price concerns. However, the embargo should not have significant consequences in the short term, European Energy Commissioner Kadri Simson recently assured, recalling, in particular, that European countries should have strategic reserves equivalent to two months of domestic consumption. Despite a sharp decline for almost a year, more than a quarter of Europe’s diesel imports still came from Russia at the start of 2023, according to global tanker tracking data analyzed by S&P Global.
Russia will lose “160 million euros” per day
This new ban comes after the ban on coal at the beginning of August 2022 and on crude oil on December 5, 2022. In parallel, EU and G7+ states adopted on Saturday, February 4, new ceilings for Russian oil products transported by sea – such as diesel and oil. The agreement includes a maximum price of $100 per barrel for more expensive products like diesel and another 45 euros per barrel for less refined products like fuel oil. This applies to all Russian oil products transported by ships from partner countries.
“As part of the G7, we set price caps for these products in order to reduce Russian revenues and ensure the stability of the global energy market,” commented European Commission President Ursula von der Leyen. According to her, this restriction costs Russia “about 160 million euros a day.” The tenth wave of sanctions is also expected by February 24, exactly one year after the invasion began.
“This will further unbalance international energy markets,” Russian presidential spokesman Dmitry Peskov responded in turn, assuring that Russia “is taking measures to protect (its) interests from emerging risks.” In retaliation for the first sanctions, Moscow banned the sale of its oil to countries using the price ceiling as early as February 1. And earlier this week, the Russian government banned domestic oil exporters and regulators from complying with Western-set crude oil price caps.