An embargo on imports of Russian diesel fuel and other refined products, imposed by the European Union (EU) to reduce Moscow’s energy dependency as a sanction for invading Ukraine, comes into effect this Sunday.
The ban, announced by Brussels in June, follows another restrictive measure approved by the G7 (the group of seven most developed countries) that agreed to limit the price of Russian oil products.
The goal of the G7 measure is to allow Russian diesel fuel to continue to flow to countries like China and India, avoiding sudden price increases that will hurt consumers around the world, while at the same time cutting profits that finance Moscow’s war budget.
Diesel is fundamental to the global economy because it is used to fuel cars, trucks carrying goods, agricultural equipment and industrial vehicles.
Diesel fuel prices have risen substantially in recent months due to a recovery in demand following the COVID-19 pandemic, which has tested the limits of refining capacity.
To compensate for restrictions on Russian oil products, the EU has sought to diversify its supply points, namely to the US, the Middle East and India.
The price cap of $100 (about 90 euros) per barrel of diesel comes after a cap of $60 (about 55 euros) per barrel of oil, which was introduced in December.
Moscow has already announced that it will try to find new buyers for its oil products.
Analysts say there could be a rise in diesel prices in the market initially, but they believe the embargo will not affect the normal functioning of Western markets as supply alternatives are found.
The ban also provides for a grace period of 55 days for diesel fueled in tankers until this Sunday, a measure aimed at avoiding market turmoil.
EU officials say importers have had time to adjust to the new situation since the ban was announced in June.
In December alone, Russia received more than one billion euros in sales of diesel fuel to Europe when importers stockpiled large amounts of fuel from that country in anticipation of an embargo starting this Sunday.