The United States and its allies are preparing for the next round of sanctions on Russia's oil industry, aimed at capping the selling price of Russia's refined petroleum product exports.

(Reuters)

[Financial Channel/Comprehensive Report] The United States and its allies are preparing to impose the next round of sanctions on Russia's oil industry, aiming to limit the sales price of Russia's refined petroleum product exports, a move that some market watchers warn could squeeze global supply.

European finance ministers this week are discussing details of upcoming sanctions on Russian oil products, which are due to take effect on Feb. 5.

Two price limits will be set on Russian refined products: exports of valuable products such as diesel and exports of low-value products such as fuel oil.

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Last month, the United States, the European Union and their allies in the Group of Seven nations moved to limit the price of Russian crude exports to $60 a barrel.

The sanctions have had a relatively small impact on global prices, encouraging hopes to put pressure on Russia's budget while minimizing volatility in key global energy markets.

But the penalties on refined products could have bigger economic consequences, not least because they will come into effect on the same day the EU bans imports of Russian diesel and other refined products.

Market watchers and some Western officials expect Russia will find it harder to redirect its exports of refined products, which could weigh on global prices.

Without access to European markets and facing Western sanctions for shipments elsewhere, Russia's refining output could fall, reducing global supply.

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