EU agrees on price caps on Russian refined oil products

This handout picture taken and released by the Ukrainian Presidential press-service on Feb 3, 2023, shows the President of the European Commission Ursula von der Leyen (left) and President of the European Council Charles Michel attending a working session during an EU-Ukraine summit in Kyiv. (PHOTO / UKRAINIAN PRESIDENTIAL PRESS-SERVICE / AFP)

BRUSSELS / WASHINGTON – European Union countries agreed to set price caps on Russian refined oil products to limit Moscow's funds for its special military operation in Ukraine, the Swedish presidency of the EU said on Friday.

EU diplomats said the price caps are $100 per barrel on products that trade at a premium to crude, principally diesel, and $45 per barrel for products that trade at a discount, such as fuel oil and naphtha. Ambassadors for the 27 EU countries agreed on the European Commission proposal, which will apply from Sunday.

The price caps, together with an EU ban on Russian oil product imports, are part of a broader agreement among the Group of Seven (G7) countries. It follows a $60 per barrel cap on Russian crude that G7 countries imposed on Dec 5

The price caps, together with an EU ban on Russian oil product imports, are part of a broader agreement among the Group of Seven (G7) countries. It follows a $60 per barrel cap on Russian crude that G7 countries imposed on Dec 5.

Both caps prohibit Western insurance, shipping and other companies from financing, insuring, trading, brokering or carrying cargoes of Russian crude and oil products unless they were bought at or below the set price caps.

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There will be a 55-day transition period for sea-borne Russian oil products bought and loaded before Sunday. The wind-down period for Russian crude oil was 45 days.

Poland and Baltic states Latvia, Lithuania and Estonia had pushed for a review of the crude oil price cap now, instead of as planned in mid-March, diplomats said, dragging talks for days. They want a lower price cap to curb Russia's revenues from fuel.

For crude, regular reviews will set a price cap at least 5 percent below the average market price for Russian oil.

Deepening ties

Also on Friday, Ukraine and the EU agreed to deepen their relations and cooperation at the 24th Ukraine-EU summit held in Kiev on Friday, according to a joint statement issued following the event.

The statement by Ukrainian President Volodymyr Zelensky, European Council President Charles Michel and European Commission President Ursula von der Leyen was published by the Ukrainian presidential press service.

According to the document, Ukraine and the EU reiterated their commitment to further deepening their relationship and promoting Ukraine's further integration with the bloc.

The parties also voiced their intention to fully exploit the potential of the Association Agreement, which entered into force on Sept 1, 2017, to establish conditions for enhanced economic and trade partnership.

Kiev and Brussels will cooperate in the implementation of the Deep and Comprehensive Free Trade Area to ease Ukraine's access to the EU's internal market, according to the statement.

ALSO READ: EU leaders greenlight 9th sanctions package against Russia

Besides, the EU will consider Ukraine's request to extend the temporary preferential trade regime, which abolishes tariffs and quotas on Ukrainian industrial goods and foods, and will expire on June 5.

The EU will support Zelensky's 10-point peace plan and the idea of a peace formula summit aiming at launching its implementation, the statement said.

Ukraine welcomes the EU's commitment to continue providing political and military support as long as it takes, which includes military assistance of more than 3.6 billion euros under the European Peace Facility, and the launch of the EU Military Assistance Mission to train an initial 30,000 Ukrainian soldiers in 2023.

The one-day Ukraine-EU summit was held in Kiev earlier in the day. In June 2022, EU leaders accepted Ukraine as a candidate for membership in the bloc.

Security aid

Meanwhile, the administration of US President Joe Biden announced Friday an additional round of security assistance for Ukraine with a total value of $2.2 billion.

The latest package was divided into two parts – $425 million through the Presidential Drawdown Authority, and $1.75 billion from the congressionally-approved Ukraine Security Assistance Initiative, according to a statement from the Defense Department.

What's particularly noticeable in the materiel are long-range rockets for High Mobility Artillery Rocket Systems, or HIMARS missile launchers that the United States have provided for Ukraine.

US Marine officers stand next to the M142 High Mobility Artillery Rocket System (HIMARS) during the Combined Arms Live Fire Exercise (CALFEX) as part of the annual naval exercises between the Philippine Marine Corps and US Marine Corps at Capas, Tarlac province on Oct 13, 2022. (PHOTO / AFP)

The new rockets are GPS-guided Ground-Launched Small Diameter Bombs (GLSDB) with a range of roughly 90 miles, more than doubling the 40-mile range that previous US-provided HIMARS-compatible missiles have.

The GLSDB's range, however, falls short compared to that of the Army Tactical Missile System (ATACMS), which has long been sought by Ukraine but refused by the United States for fear of escalation of the Russia-Ukraine conflict. The ATACMS has a range of nearly 200 miles.

READ MORE: Biden says 'no' to sending fighter jets to Ukraine

The US government will contract with weapons manufacturers to provide the GLSDB, as well as two HAWK air defense firing units and unspecified "equipment to integrate Western air defense launchers, missiles, and radars with Ukraine's air defense systems." That means it will be months away from the actual delivery of these weapons.

The United Sates has committed more than $29.3 billion in security assistance for Ukraine since the Russia-Ukraine conflict broke out nearly a year ago, according to the Pentagon's statement.

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