EU diplomats will continue talks this week after failing to agree on the levels of new oil price caps for refined oil products due to be introduced on Sunday.

The European Commission last week proposed a cap for premium oil products, such as diesel, at $100 and one for $45 for other products that typically trade at a discount to crude.

The G7 group of wealthy nations were looking towards a higher level for diesel but could live with $100, according to Bloomberg. Diesel has been trading nearer $115 a barrel.

The caps will be brought in alongside a European Union ban on Russian product imports. The measure will force European buyers to look further afield for supplies, boosting tanker tonne-miles.

A price cap for crude of $60 was introduced on 5 December by the G7 group of Canada, France, Germany, Italy, Japan, the UK and US along with the EU and Australia. EU and G7 shipping interests can only move Russian oil if the oil is sold at or below that price.

Although Russian crude exports have held up, the cap has contributed to forcing down prices and reducing revenues for benchmark Urals barrels, according to analysts.

US Treasury chief Janet Yellen said last week that the EU and US were in the middle of discussions about the levels of the new caps but the talks could run right up to the deadline. The crude price cap was announced just before it was due to come into force.

The announcement gave traders little time to prepare and led to Russian export volumes plunging in the immediate aftermath before picking up again towards the end of December.

“The prospects for Russian oil production in the near-term are affected most significantly by the formal and informal sanctions on imports of Russian oil,” said the BP annual energy outlook for 2023.

It has predicted a “sustained decline” in Russian volumes in coming years owing to the war because of the restrictions on its export markets and the inability to bring in outside technology from western suppliers.