Europe is taking another big step toward cutting its energy ties with Russia, banning imports of diesel fuel and other products made from crude oil in Russian refineries. The European Union ban takes effect 5 February following its embargo on coal and most oil from Russia. The 27-nation bloc is trying to sever its last uses of Russian energy and stop feeding the Kremlin’s war chest as the anniversary of the invasion of Ukraine nears.

The newest ban has risks: Diesel prices have already jumped since the war started on 24 February last year, and they could rise again for the fuel that is key to the global economy. “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.

Most things people buy or eat is 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. Diesel, like crude oil, is sold globally, and Europe could look for new sources, such as the US, India or countries in the Middle East. If that goes smoothly, the impact on prices might be temporary and modest.

Europe has already cut Russian diesel imports almost in half, from 50% of total imports before the war to 27%. US suppliers have stepped up supplies 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. The EU’s top energy official, Kadri Simson, says markets have had time to adjust after the ban was announced in June. Europeans also appear to have stocked up on Russian diesel before the deadline, with imports rising last month.

There is a complicating factor: the Group of Seven major democracies are talking about imposing a price cap on Russian diesel heading to other countries, just as they did on Russian crude. As with oil, the idea is to keep Russian diesel flowing to world markets but reduce Moscow’s revenue.

Source: Euronews