Europe Bans Russian Diesel, Other Oil Products Over Ukraine War

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, the Associated Press (AP) reported.

Photo Insert: Diesel prices have been elevated due to recovering demand after the COVID-19 pandemic and limits on refining capacity, contributing to inflation for other goods worldwide.

The ban comes along with a price cap agreed by the Group of Seven (G7) democracies. The goal is allowing Russian diesel to keep flowing to countries like 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 due to 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 (EU) finds new supplies of diesel from the US, Middle East, and India to replace those from Russia, which at one point delivered 10% of Europe's total diesel needs.

Those are longer journeys than from Russia's ports, stretching available tankers. Prices also could be driven up by reviving demand from China as the economy rebounds after the end of draconian COVID-19 restrictions.

The price cap of $100 per barrel for diesel, jet fuel, and gasoline is to be enforced by barring insurance and shipping services from handling diesel priced over the limit. Most of those companies are located in Western countries.

It follows a $60-per-barrel cap on Russian crude that took effect in December and is supposed to work the same way. Both the diesel and oil caps could be tightened later.

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