Six European Union countries have called on the European Commission to reduce the price of Russian oil to US$60 per barrel set by the Group of Seven countries, arguing that this would reduce Moscow's revenues needed to continue the war in Ukraine without causing a market shock.

Source: Reuters

The price caps on Russian marine oil and petroleum products were imposed by the G7 countries to limit Moscow's oil revenues and thus limit its ability to finance the invasion of 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 executive arm.

"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 upper price limit 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 oil products at a discount to oil.

These price ceilings have remained unchanged since December 2022 and February 2023, when they were introduced, while Russian oil prices on the market were on average 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 of the six countries said.

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

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