Russia is being targeted by the EU and its rich allies for its ability to make money from its vast oil resources. They are moving to reduce the price of Moscow’s refined oil products.

The bloc proposes that G7 members set a $100 per barrel price for Russian diesel and a $45 separate limit for cheaper oil products. The EU plans to introduce the measure on February 5, the same day that its embargo against Russian oil products takes effect. Bloomberg first reported the news.

It is the second round in price caps on Russian oil. The EU, G7, and Australia agreed last month to impose a price limit on Moscow’s crude along with an EU embargo for its member countries (except Bulgaria) that prohibits them from buying Russian seaborne oil.

This move led to a $60 per barrel cap on Russian oil. According to data from market intelligence company Argus, the price of Russia’s Urals-grade crude oil was $47 per barrel on Thursday. This is a significant drop from the benchmark Brent crude oil price of $84 per barrel. It also indicates that other buyers of Russian oil, such as India and China, are trying to squeeze Moscow for huge discounts.

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Budgetary pain

Russia is already suffering from the impact of crude oil caps, and now the EU and its allies are determined to take another hit on Russian refined products such as diesel.

“Taking into consideration the effectiveness of [price caps on Russian crude] it is appropriate for us to introduce two additional price limits for petroleum products,” reads the proposal from the EU’s External Action Service, as seen by POLITICO.

Janet Yellen is the U.S. Treasury Secretary and is currently on a tour through Africa.

The EU proposal proposes a cap of $45 per barrel for products that are typically traded at a discount to crude oil, such as white oils and fuel oil, and $100 per barrel for premium products, such diesel and gasoline oil.

Janis Kluge (senior associate and Russian budget monitor at the German Institute for International and Security Affairs) stated that Russia will feel it because oil products are another way Russia can export crude oil.

Moscow’s oil companies were “already struggling” last year to export crude oil. They “tried to operate their refineries to the maximum” to obtain customers, but it will not be as simple, he stated.

Russia has historically supplied more diesel imports than the EU, raising concerns about a shortage once the embargo goes into effect. According to Eugene Lindell (head of refined products, energy consultancy FGE), this scenario is unlikely to happen in the near term due to last-minute diesel purchases, low demand and unseasonably mild temperatures.

He said that the suggested diesel price cap was “relatively low”, which is good for consumers as it reduces the possibility of supply disruptions.

Lindell predicts that diesel markets will return to normal in April, despite the fact that there will be a “big… reshuffling” of global flows. He said that the EU would likely be looking more to the U.S.A and the Middle East for refined fuels in the meantime.

The proposal will be formally discussed by the bloc’s ambassadors on Friday. Before the other G7 member countries can approve the measure, they must agree to it unanimously.