G7 weighs lowering Russian oil price cap amid EU pressure
On Monday, the G7 countries will consider lowering the price cap on Russian oil, said European Commission spokesperson Olof Gill. The Northern EU countries, including Sweden, Finland, Denmark, Lithuania, Latvia, and Estonia, have appealed for a limit reduction, which has been set at $60 per barrel since 2022.
In a letter addressed to the European Commission, the six countries argued that the time has come to enhance the impact of sanctions imposed on Russia due to its invasion of Ukraine by lowering the price cap introduced on Russian oil in December 2022.
They want to lower the price cap on Russian oil
The price level of $60 per barrel was set by the group of G7 countries, which includes economically strong democracies: Canada, France, Germany, Italy, Japan, the United Kingdom, the United States, and the European Union.
In a letter seen by PAP, Sweden, Finland, Denmark, Lithuania, Latvia, and Estonia pointed out that restrictions on oil exports are crucial because they "reduce Russia's most important source of revenue." These countries argue that the price can be reduced as the international oil market is currently better supplied than in 2022. This reduces the risk that a lower price cap might cause a supply shock, the signatories indicated.
The letter explained that due to constrained storage capacity and a heavy dependence on energy exports for revenue, Russia is compelled to continue exporting oil even at significantly reduced prices.
According to these six countries, efforts to lower the price cap on Russian oil should go hand in hand with actions against the so-called shadow fleet (ships illegally transporting Russian oil), as well as against entities facilitating Russia in trading oil above the imposed price cap.
The European Commission spokesperson confirmed receipt of the letter, stating it would contribute to the ongoing G7 discussions. The final decision on the matter rests with the G7 partners. The spokesperson also highlighted that any agreement on a lower price cap would require unanimous approval from EU member states.
Tankers with Russian oil stuck off the coast of China
Three tankers with Russian oil are stuck off the coast of China due to the latest American sanctions, Bloomberg reported on Monday. The Friday sanctions package listed them among 183 units of the so-called shadow fleet, transporting Russian oil at prices above the established cap of $60 per barrel.
While implementing the sanctions, representatives of the US administration emphasized that this most severe package of restrictions imposed so far should cause losses in Russia of billions of dollars monthly.
On Friday, the White House imposed comprehensive restrictions on over 400 entities, including two of Russia's largest oil producers, Gazprom Neft and Surgutneftegaz, responsible for over a quarter of the country's oil exports.
