Dombrovskis: EU to propose a lower price cap on Russian oil to G7

The European Union will propose that G7 finance ministers lower the price cap on Russian oil transported by sea from its current level of 60 dollars per barrel. European Commission Vice-President for the Economy Valdis Dombrovskis said this today, without specifying how much the cap would be lowered. However, unnamed EU officials familiar with the matter told Reuters that the union would propose a limit of 50 dollars per barrel.

The EU, together with the G7 and Australia, introduced a price cap of 60 dollars per barrel on Russian oil transported by sea in December 2022 in response to Russia’s invasion of Ukraine. If the limit is exceeded, it is prohibited to transport the oil or insure its transportation. The system aims to limit Moscow’s revenue for financing the war in Ukraine, while also preventing a significant disruption to oil supplies on the global market.

Dombrovskis said today that he would put forward the proposal to lower the price cap at a meeting of G7 finance ministers in Canada this week. The G7 comprises the United States, Canada, Germany, Britain, France, Italy and Japan.

Russia circumvents the price cap using a so-called shadow fleet of tankers that are not insured by Western insurance companies. As a result, the selling price of Russia’s key Urals crude exceeded the cap for most of the time, but fell below it in early April as oil prices on global markets came under pressure amid concerns about the negative effects of US President Donald Trump’s tariff policy on the global economy and global demand for fuel.