Monday, February 6, 2023
spot_img
HomeHeadlinesG7 Nations Designing Price Caps on Russian Refined Oil Products

Subscribe

To our FREE newsletter
Get all the latest maritime news delivered straight to your inbox.

G7 Nations Designing Price Caps on Russian Refined Oil Products

Group of Seven nations are aiming to design two price caps for Russian refined petroleum products to account for those that trade at higher prices than crude, as well as those that sell at a discount, according to an official.

As part of an effort to sanction Russia for its invasion of Ukraine, the European Union is set to ban the import of refined Russian products on Feb. 5 and to impose price caps on exports to third countries, which would in particular affect diesel, naphtha and fuel oil. The exact mechanisms and the price levels are still being negotiated among G-7 nations and the EU.

The refined products ban followed a European ban on Dec. 5 of Russian crude imports, along with a price cap mechanism that allows European companies to provide financing and insurance for crude exports from Russia that are priced no higher than $60 a barrel.

The system, which is aimed at limiting Russia’s revenues while avoiding spikes in oil prices, has been successful in both aims so far, said the G-7 official, who spoke to reporters on the condition of anonymity. Russia’s Urals grade crude, its top export stream, was $37.80 a barrel at the Baltic Sea port of Primorsk on Friday, according to data provided by Argus Media. That was less than half of where Brent futures settled on the same day.

The refined petroleum ban is in some ways more complicated to design and implement. Diesel and kerosene historically trade at premium prices compared to crude, while fuel oil sells at a discount, the official said. The prices have also been extremely volatile over the past year.

Some European officials have been worried about a shortage of diesel supplies as the year goes on, but the G-7 official said the market should be flexible enough to adapt. 

Russian diesel, for example, that is currently sold to Europe will likely find buyers in Latin America and Africa. Europe, meanwhile, will likely be able to buy diesel from the Middle East and the US, which currently sell more to Latin America and Africa. The official, who described it as a reshuffling of the trade across the Atlantic, said it could bring higher shipping costs since some shipments will be going over a longer distance.

It’s unclear how Russia will respond to the refined products move. Moscow objected strongly to the price cap on crude oil. Russia has continued to sell oil, but the energy ministry said it introduce new monitoring regulations aimed at helping it limit any possible price discounts that are emerging.

The EU is set to review the crude oil price cap level in mid-January and some countries want to lower the cap by 5%. The G-7 official noted that the market has already helped produce lower prices, suggesting a formal bureaucratic change isn’t necessary.

The official said that China and India have been able to negotiate lower crude prices with Russia since the cap has been introduced. 

[Bloomberg]

Related Posts

Video

Finance & Economy
Shipping News
Ports

LNG boosts CPLP 2022 results

Capital Product Partners L.P. released its financial results for the fourth quarter ended December 31, 2022. Highlights  Three-month periods ended December 31, 20222021Increase/(Decrease)Revenues$79.9 million$63.6 million26%Expenses$42.1 million$35.7...

Keppel Corp posts 9% drop in full-year profit

Singapore’s Keppel Corp said on Thursday its net profit for the year fell 9%, partly hurt by weak performance from its urban development business...

Stolt-Nielsen sees Q4 profits rise on strong markets

Stolt-Nielsen Limited reported unaudited results for the fourth quarter and full year 2022. The Company reported a fourth-quarter net profit of $95.3 million, with revenue...

Euronav delivers better-than-expected Q4 revenue

Euronav NV reported its non-audited financial results for the fourth quarter ended 31 December 2022. Hugo De Stoop, CEO of Euronav said: “Constrained vessel supply...

Wartsila: A challenging year with strong annual growth

HIGHLIGHTS FROM OCTOBER–DECEMBER 2022 Order intake decreased by 24% to EUR 1,638 million (2,150)Service order intake increased by 6% to EUR 791 million (747)Net sales...

Baltic index hits over 2-year trough on waning demand for larger vessels

The Baltic Exchange’s dry bulk sea freight index dropped to its lowest level in...

Luxury Cruise Market Holds Much Promise For Greek & East Med Hidden Gem Destinations

The appeal of Greece and the East Mediterranean as an ideal region for luxury...

Baltic index falls to over 2-year low as larger vessel rates slide

The Baltic Exchange’s dry bulk sea freight index fell to its lowest since June...

Baltic index logs worst month in 3 years

The Baltic Exchange’s main sea freight index registered its biggest monthly percentage fall in...

Baltic index snaps 9-day losing streak as panamax, supramax rates rise

The Baltic Exchange’s main sea freight index snapped its nine-session losing streak on Tuesday,...

DP World wins bid for development of a mega-container terminal at India’s Deendayal Port

DP World has won a major concession to develop, operate and maintain the mega-container terminal at Deendayal port in Gujarat, on the western coast...

Luxury Cruise Market Holds Much Promise For Greek & East Med Hidden Gem Destinations

The appeal of Greece and the East Mediterranean as an ideal region for luxury cruising will be one of the main highlights of the...

Port of Los Angeles proposes cruise terminal project

The Port of Los Angeles is inviting comments on a draft Request for Proposals (RFP) for the future development of a new Outer Harbor...

Port of Long Beach Closes 2022 with Second-Busiest Year

The Port of Long Beach marked its second-busiest year on record by moving 9.13 million twenty-foot equivalent units in 2022, allowing for a return...

Hapag-Lloyd AG acquires share in J M Baxi Ports & Logistics Limited

Hapag-Lloyd AG signed a binding agreement today under which it will acquire 35% of J M Baxi Ports & Logistics Limited (JMBPL) from a...