In an effort to restrict Moscow’s income, the Group of Seven (G-7) nations and the members of the European Union have decided to set a restriction of $100 per barrel on sales of Russian diesel to third parties.

The price cap mechanism is linked to a Sunday start-up EU ban on seaborne imports of Russian refined fuels. In a statement released on Friday, the G-7 announced that it and the EU had reached an agreement on a price threshold of $100 per barrel for petroleum products like diesel that trade at a premium to crude oil.

Additionally, they supported a cap of $45 for products that are sold at a loss; such as fuel oil and some varieties of naphtha.

A reassessment of the $60 ceiling on the price of Russian crude oil was also postponed until March by the coalition. Following that, all the cap levels will start receiving routine reviews every two months, according to sources familiar with the conversations, who preferred to remain anonymous. The EU must unanimously approve the prices, and the Group of Seven must also give its approval.

“The caps we have just set will now serve a critical role in our global coalition’s work to degrade Russia’s ability to prosecute its illegal war,” US Treasury Secretary Janet Yellen said in a separate statement.

During negotiations between the G-7 and EU, officials expressed concerns that setting too low a level risks causing price spikes or supply glitches in Europe.

The cap on fuel prices includes a grace period until April for cargoes loaded before the cap was agreed, according to the people. The price cap measures will ban companies from providing shipping and services needed to transport the goods, such as insurance; unless the oils and fuels are purchased below the agreed price thresholds.

Benchmark diesel futures in northwest Europe have fallen recently, settling at $845.50 a ton, or $113 per barrel, on Thursday, though remain well above seasonal norms. But Russian diesel was priced at a significant discount earlier this week — about $90 — according to a calculation by Bloomberg based on data provided by Argus Media Ltd.

Russian refiners “would not be significantly impacted” by price limitations of $100 and $45 per barrel, according to consultant Wood Mackenzie Ltd. earlier this week.

Nevertheless, the consultancy predicts that due to the EU import bans, Russian crude exports will fall by approximately 200,000 barrels per day and the country’s crude runs would be about 800,000 barrels per day lower this quarter than they were last quarter.

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