EU BAN ON RUSSIAN PETROLEUM PRODUCTS LEADS TO HIGHER FREIGHT COSTS
On 5 February, the EU ban for refined petroleum products from Russia entered into force, which was decided in June 2022 as part of the sixth package of sanctions adopted by the Council of the EU. However, such effort from the EU to curb Moscow’s revenues from energy exports has led the cost of moving gasoline and other fuels on oil tankers to soar.
The price cap mechanism put in place was set by the Commission at $100 per barrel but, as the EU wants to avoid having a negative effect on the entire global trade, it would allow services to occur below the enforced low price. The ban also bars EU vessels from carrying Russian-origin petroleum products, with penalties according to national legislation and possibly financial penalty up to 5% of their global turnover. Penalties will also apply for companies that provide technical, brokering or financial assistance for cargoes carrying Russian refined products. In the case of a vessel sailing under the flag of a third country intentionally carries Russian-origin petroleum oil above the price cap, EU operators will be prohibited from insuring, financing and servicing it for 90 days after the cargo has been unloaded.
However, since 5 February, the cost of moving gasoline and other fuels did sharply increase, surging by 58% on last Thursday alone, the largest one-day gain since late 2021. This was caused by a number of tankers that decided to continue moving Russian products, estimated to be 600, which led to have fewer vessels serving other oil exporters and to higher costs of freight.