Denmark, Estonia, Finland, Latvia, Lithuania, and Sweden have called on the European Commission to revise the price cap on Russian seaborne oil, urging stronger sanctions to disrupt Russia’s war efforts in Ukraine. These countries argue that the current price cap, set at $60 per barrel since late 2022, needs to be lowered to increase its effectiveness and reduce Russia’s revenue from oil exports.

A Call for Stronger Sanctions and Increased Impact

The six nations argue that “sanctions must be strengthened continuously” to undermine Russia’s primary income source—oil exports. In a joint letter sent on January 11, they emphasized that Russia’s dependency on energy exports means it has no alternative but to continue selling oil at lower prices, even to maintain its war economy. The countries advocate for the price cap to be reduced, believing that doing so would significantly diminish Russia’s oil revenues, which have continued to exceed the West’s limits despite the sanctions.

The letter highlights that the international oil market is more stable now than in 2022, and there is no immediate risk of a supply shock. Consequently, they argue that the cap should be revised downward to further pressure Russia, which has been circumventing the restrictions with a “shadow fleet” of tankers. These vessels, often poorly maintained and operating under opaque ownership structures, have been used to transport oil at higher prices, circumventing the G7-imposed price cap.

Impact of the Shadow Fleet and Calls for Expanded Sanctions

The use of the “shadow fleet” has raised concerns, particularly about deceptive practices such as falsifying data, turning off transponders, and engaging in ship-to-ship transfers to obscure the origin of the oil. The Centre for Research on Energy and Clean Air (CREA) reports that in December, only 36% of Russia’s seaborne crude oil was transported by tankers subject to the G7 price cap, with the rest handled by these shadow vessels.

The six nations also urged the EU to broaden sanctions to target these vessels and entities facilitating the circumvention of the cap. So far, 79 vessels have been sanctioned, but the countries believe more action is necessary to clamp down on illegal practices.

While the European Commission has acknowledged the letter, it noted that any revision of the price cap would ultimately be a decision for the G7. Should a proposal be made, all 27 EU member states would need to reach unanimous agreement before the G7 could take action.