EUs Proposal to Cut G7 Price Cap on Russian Oil to $50 per Barrel Under Discussion

Brussels intends to propose a reduction of the existing price cap on Russian seaborne oil, currently set at $60 per barrel, during this week’s meeting of G7 finance ministers, as stated by European Economic Commissioner Valdis Dombrovskis on Monday.

While Dombrovskis did not disclose the specific price target for the proposed cap, informed officials indicate that Brussels is likely to suggest a new limit of $50 per barrel.

When asked if he would advocate for lowering the price cap at the upcoming G7 finance ministers’ meeting in Canada, the commissioner confirmed affirmatively, stating: «Yes.»

«This is an issue we’ve highlighted from the Commission’s side in relation to the 18th sanctions package. I anticipate that there will be interest from other G7 partners and discussions on this matter,» he added.

The G7 comprises the United States, Canada, the United Kingdom, France, Germany, Italy, and Japan. The European Commission, along with the chair of the Eurozone finance ministers, also participates in these meetings.

The price cap instituted by the G7 came into effect in December 2022, prohibiting the trade of Russian crude oil transported by tankers if the purchase price exceeded $60 per barrel. It also restricted shipping, insurance, and re-insurance firms from managing shipments of Russian oil unless sold below the set price limit.

This measure aims to reduce Russia’s revenue, thereby limiting its funding for the war against Ukraine, while simultaneously preventing a drastic drop in global oil supplies.

Nonetheless, Russia has managed to bypass the G7 price cap by utilizing a «shadow fleet» of tankers that do not rely on insurance from Western companies, resulting in Russian Urals crude trading above the cap for extended periods.

However, the price dipped below $60 in early April, as global concerns regarding economic growth following U.S. tariffs negatively impacted oil pricing as well.