Europe has imposed a ban on Russian diesel fuel and other refined oil products, slashing energy dependency on Moscow and seeking to further crimp the Kremlin’s fossil fuel earnings as punishment for invading Ukraine.
Sunday’s ban comes along with a price cap agreed by the Group of Seven (G7) allied countries – the United States, Britain, Germany, France, Italy, Japan and Canada.
The goal is allowing Russian diesel to keep flowing to countries such as China and India and avoiding a sudden price rise that would hurt consumers worldwide while reducing the profits funding Moscow’s budget and war.
Diesel is key for the economy because it is used to power cars, trucks carrying goods, farm equipment and factory machinery. Diesel prices have been elevated because of recovering demand after the COVID-19 pandemic and limits on refining capacity, contributing to inflation for other goods worldwide.
The new sanctions create uncertainty about prices as the 27-nation European Union finds new supplies of diesel from the US, Middle East and India to replace those from Russia, which at one point delivered 10 percent of Europe’s total diesel needs. Those are longer journeys than from Russia’s ports, stretching available tankers.