Six EU countries call for lowering of G7 price cap on Russian oil, Reuters reports

Six European Union countries have called on the European Commission to lower the US$60 per barrel price cap the G7 countries have set on Russian oil, arguing that this would reduce the revenues Moscow needs to continue its war in Ukraine without causing a market shock.

Source: Reuters

The G7 countries imposed price caps on Russian seaborne oil and petroleum products in order to limit Moscow's oil revenues and thus restrict its ability to finance the war on Ukraine.

Quote: "Measures that target revenues from the export of oil are crucial since they reduce Russia's single most important income source," Sweden, Denmark, Finland, Latvia, Lithuania and Estonia said in a letter to the EU’s main executive body.

"We believe now is the time to further increase the impact of our sanctions by lowering the G7 oil price cap," the letter says.

Details: The G7 cap was set at US$60 per barrel for Russian oil and oil products, with a maximum of US$100 per barrel for premium oil products and US$45 per barrel for lower-value oil products.

These price caps have remained unchanged since they were introduced in December 2022 and February 2023, whereas average Russian oil prices on the market were below this level in 2023 and 2024.

"The international oil market is better supplied today than in 2022, reducing the risk a lower price cap will cause a supply shock," the letter from the six countries said.

It is noted that given its limited oil storage capacity and significant dependence on energy export revenues, Russia will be forced to continue selling oil even if prices plummet.

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