Six European Union countries have called for a reduction in the $60 per barrel price cap on Russian oil set by the G7. The countries argue that lowering the cap would further limit Moscow’s revenues from oil exports, weakening its ability to finance the war in Ukraine without destabilizing global markets.
The price caps, applied to both Russian crude and refined petroleum products, were introduced by G7 nations to curb Russia’s primary source of income. The countries—Sweden, Denmark, Finland, Latvia, Lithuania, and Estonia—expressed their concerns in a letter to the European Commission, stating that oil revenue is Russia’s most crucial financial resource.
“We believe now is the time to increase the impact of our sanctions by lowering the G7 oil price cap,” the letter read.
The G7 price cap, set at $60 per barrel for Russian crude, also includes a cap of $100 per barrel for premium products and $45 per barrel for discounted products. The six EU nations argue that further reducing the cap would significantly cut into Moscow’s income, which could help undermine its war efforts.
Andriy Yermak, chief of staff to Ukrainian President Volodymyr Zelensky, echoed this sentiment, stressing the importance of price caps in limiting Russia’s military aggression.
“There is a clear link between energy prices and Russia’s level of aggression,” Yermak wrote on Telegram. “The export of energy is the main source of war financing for the Kremlin. The lower the price of oil, the closer we come to peace.”
Since their introduction in December 2022 and February 2023, the price caps have remained unchanged. In 2023 and 2024, Russian crude prices have generally stayed below the cap level. The six EU countries believe that the current global oil market, which is better supplied than in 2022, reduces the risk of a supply shock if the cap is lowered.
“Russia, with its limited storage capacity and heavy reliance on energy exports for revenue, has no alternative but to continue oil exports, even at a lower price,” the letter stated.
By lowering the price cap, these EU nations argue that further pressure could be placed on Russia’s economy, weakening its ability to fund the ongoing war in Ukraine.
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