BRUSSELS, Belgium (Reuters)

Six European Union countries on Monday called on the European Commission to lower the US$60 per barrel price cap put on Russian oil by G7 countries, arguing it would reduce Moscow’s revenues to continue the war in Ukraine while not causing a market shock.

Price caps on Russian seaborne crude as well as refined petroleum products were set by G7 countries to curb Moscow’s revenues from oil trade and in this way limit the country’s ability to finance its invasion of Ukraine.

“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,” it said.

The G7 price cap was set at US$60 per barrel of Russian crude and for petroleum products at a maximum of US$100 per barrel of premium-to-crude products and US$45 per barrel for discount-to-crude products.

Andriy Yermak, Ukrainian President Volodymyr Zelenskiy’s chief of staff, said imposing and enforcing price caps were a critical factor in dealing with Russia.

“There is a clear correlation between the price of energy carriers and the level of Russian belligerence,” Yermak wrote on the Telegram messaging app.

“The export of energy is the main source of war financing for the Kremlin. The higher the price of oil, the greater the number of weapons and aggressive intentions in Russia. The lower the price of oil is, the closer peace will be.”

The price cap maximum prices have not changed since December 2022 and February 2023 when they were introduced while Russian crude prices on the market were below that level on average 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. “In view of limited storage capacity and its outsized dependence on energy exports for revenue, Russia has no alternative to continue oil exports even at a substantially lower price.”