West implements price caps on Russian oil products as Moscow vows to safeguard interests

BEIJING -- The implementation of further price caps for seaborne Russian petroleum products, adopted Saturday by the European Union (EU) and the Group of Seven, began Sunday, despite Russia's vow to take measures to protect its interests.

The price cap for "premium-to-crude" petroleum products, such as diesel, kerosene and gasoline, is set at $100 per barrel, while the cap for "discount-to-crude" petroleum products, such as fuel oil and naphtha, is set at $45 per barrel, the European Commission said in a press release.

It includes "a 55-day wind-down period" for seaborne Russian petroleum products purchased above the price cap, provided it is loaded onto a vessel at the loading port before Feb 5, 2023, and unloaded at the final port of destination before April 1, 2023, the commission added.

Meanwhile, the EU's ban in June 2022 on imports of Russian petroleum products also took effect Sunday.

The Kremlin warned Friday of a "further imbalance" in global energy markets. "Naturally this will lead to a further imbalance of the international energy markets, but we are taking measures to hedge our interests against the risks associated," Kremlin spokesman Dmitry Peskov told reporters.

In December 2022, the EU placed a price cap of $60 per barrel on Russian seaborne crude oil, a move adopted by the Group of Seven.

Under the price cap, insurance, finance and other services for Russian oil shipments will be banned if oil sells for more than $60 a barrel.

In response, Russian President Vladimir Putin signed a decree on Dec 27, 2022, announcing countermeasures to the price ceiling on Russian oil.

According to the decree, the supply of Russian oil and petroleum products to foreign legal entities and individuals will be banned if a price cap is directly or indirectly stipulated in the contracts.

The Russian president could grant special permission to deliver oil and petroleum products otherwise prohibited under the decree.