EU's New Sanction Strategy: G7 Price Cap Revision

The European Union plans to propose a reduction of the $60 per barrel price cap on Russian seaborne oil to G7 finance ministers as part of the new sanctions against Moscow. This move aims to further reduce Russia's revenue amidst its ongoing invasion of Ukraine.

The European Union is set to unveil a proposal to the G7 finance ministers to lower the current $60 per barrel price cap on Russian seaborne oil, as part of a new sanctions initiative against Moscow. This announcement was made by European Economic Commissioner Valdis Dombrovskis on Monday.

In response to questions from reporters, Dombrovskis confirmed the proposal, hinting at discussions with other G7 partners about reducing the cap to $50 per barrel. The existing price cap, established in December 2022, restricted trade in Russian crude oil transported by tankers above the $60 threshold and limited associated shipping, insurance, and re-insurance activities.

The initiative aims to cut off significant revenue sources for Russia amid its Ukraine invasion while avoiding a steep decline in the global oil supply. Despite attempts by Russia to evade the cap, including using non-western insured tankers, recent economic concerns have led to a drop in global oil prices, posing challenges to the current cap's efficacy.

(With inputs from agencies.)