The European Union is taking another big step toward cutting its energy ties with Russia. The 27-nation bloc is banning Russian refined oil products like diesel fuel and joining the U.S. and other allies in imposing a price cap on sales to non-Western countries.
Europe's ban takes effect Sunday following its embargo on coal and most oil from Russia. The move is meant to further slash reliance on Russian energy and payments into the Kremlin's war chest as the anniversary of the invasion of Ukraine nears.
The newest energy sanctions have risks: Diesel prices have already jumped since the war started on Feb. 24, and there's uncertainty about how the EU embargo and price cap by the Group of Seven major democracies will affect the market for a fuel crucial to the global economy.
Most things people buy or eat are transported at some point by trucks, which mostly run on diesel. It also powers farm equipment, city buses and industrial equipment. The higher cost of diesel is built into the price of almost everything, helping push up inflation that has made life harder for people worldwide.
Companies have already felt the pain. “We’re leaving money in the road to provide our services,” said Hans-Dieter Sedelmeier of the family-run German bus and travel company Rast Reisen.
Here are key facts about the sanctions on Russian oil products:
HOW WILL THE EMBARGO AND PRICE CAP WORK?
European importers have had months since the ban was announced in June to line up new supplies. They have already cut Russia's share of EU imports to 27% in December from more than half before the war began.
U.S. suppliers have stepped up shipments to record levels, from 34,000 barrels a day at the start of 2022 to 237,000 barrels per day so far in January, according to S&P Global.
New refinery capacity coming on line this year in Kuwait and Saudi Arabia and next year in Oman also could help. India is another potential source. Russia, on the other hand, would have to find new customers.