Japan joins price cap on Russian petroleum products

Japan has joined the US-led West’s price cap bandwagon introducing a ceiling on Russian oil products over its invasion of Ukraine and in accordance with the position of the Group of Seven (G7), the Japanese Foreign Ministry stated on Monday.

Similar to the EU’s cap that went into effect on February 5, Japan’s ceiling will be on seaborne Russian petroleum products in the amount of $100 and $45 per barrel depending on their category. Tokyo’s cap comes into force on February 6.

The EU Council approved the decision to set its price cap on February 4. Two price ceilings have been set for Russian petroleum products. The first one of $45 a barrel is for petroleum products sold with a discount against crude oil (fuel oil and naphtha). The other one of $100 per barrel is for oil products sold at a higher price than crude oil (diesel fuel and kerosene).

On top of the December 2022 price cap for Russian crude, as of February 4, 2023, a coalition consisting of Australia, the UK, Canada, the US, Japan and the EU, also introduced a price ceiling on seaborne Russian oil at $60 per barrel for vessels and territories under their authority. Consequently, their logistic companies and foreign firms are now banned under threat of sanctions from carrying Russian oil and petroleum products and supplies at prices above the ceiling. Financial companies are also banned from providing insurance for such supplies.

The price level will be revised once every two months, with the revaluation of the crude oil price cap scheduled for mid-March.