Europe bans Russian diesel and other oil products

Europe has banned Russian diesel and other refined oil products. The decision has been taken to punish Russia for invading Ukraine.

The Group of Seven (G7), which is made up of the United States, Britain, Germany, France, Italy, Japan, and Canada, agreed on a price cap that goes along with the ban on Sunday.

The goal is to keep diesel from Russia going to places like China and India and to keep prices from going up suddenly, which would hurt consumers all over the world and cut into the profits that pay for Moscow’s budget and wars.

Diesel is important to the economy because it is used to power cars, trucks that carry goods, farm equipment, and factory machinery. Diesel prices have gone up because of increased demand after the COVID-19 pandemic and limited refining capacity. This has made other goods more expensive around the world.

The new sanctions make it hard to predict prices until the European Union, which is made up of 27 countries, finds new sources of diesel from the US, the Middle East, and India to replace those from Russia, which used to meet 10% of Europe’s diesel needs. These are longer trips than those from Russia’s ports, which limits the number of tankers that can be used.

Neil Atkinson, who used to work as an analyst for the International Energy Agency, told Al Jazeera that EU sanctions on Russian products probably wouldn’t have a big effect on prices, at least at first.

Atkinson said that this is because companies all over the world have been stocking up on Russian goods before the ban, which was widely known about.

“There is a chance that if demand growth is very strong in the Asian economies, the lack of investment in parts of the oil industry’s infrastructure could lead to shortages and price spikes,” he said.

The G7 price cap of $100 per barrel for diesel, jet fuel, and gasoline will be enforced by making it illegal for insurance companies and shipping companies to handle diesel that costs more than the cap. Most of these companies are in countries in the West.

It is meant to work the same way as a cap on Russian crude oil of $60 per barrel that went into effect in December. Both the diesel and oil caps could be tightened at a later time.