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US, Allies Agree to Review Russian Crude Price Cap in March

(Bloomberg) -- Officials from the US and allied nations agreed to undertake a review of the level of the Russian crude price cap in March and to move toward instituting price caps on Russian refined fuel products.

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The agreement came in discussions among officials in the price-cap coalition, according to a US Treasury statement Friday, following US Deputy Treasury Secretary Wally Adeyemo’s virtual meeting with other deputy ministers.

Some EU member states, including Poland and Estonia, have pushed for a price cap even lower than the current $60 per barrel, to further limit Russian revenues. But the US has pushed to keep that price level ahead of the additional curbs on the trade in refined Russian fuel.

“The Deputies agreed to an approach for refined products that will institute two distinct caps, in addition to the crude cap: one cap for products that generally trade at a premium to crude, such as diesel or gasoil, and one for products that trade at a discount to crude, such as fuel oil,” the Treasury Department said.

There has been pressure to agree on a price cap on Russian fuel before an EU ban goes into effect in February. The EU imported about 220 million barrels of diesel-type product from Russia last year, according to Vortexa Ltd. data compiled by Bloomberg. The fuel is vital to the bloc’s economy, powering cars, trucks, manufacturing equipment and more.

Still, diesel traders are diverting cargoes of the fuel away from the EU, suggesting that, despite the impending collapse in Russian cargo deliveries to the bloc, the US may have an even more acute supply situation. Freezing weather halted more than a third of Texas Gulf Coast oil-refining capacity late last year and a key fuel pipeline to New York Harbour was also recently closed.

(Updates with EU import data in fifth paragraph)

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