EU Weighs Freezing Russian Oil Price Cap to Curb Revenues

The European Union is weighing a temporary freeze on its $44.10-per-barrel price cap for Russian seaborne crude oil to prevent the threshold from rising too high. This move follows a sharp surge in global energy prices triggered by US-Israeli strikes on Iran starting February 28 and the subsequent closure of the Strait of Hormuz.

Under the current dynamic pricing mechanism, the cap is adjusted every six months to remain 15% below the average price of Russian Urals. Officials warn that the upcoming July review could automatically push the cap to at least $65 per barrel, which would exceed the G7-agreed $60 threshold and potentially increase Russia's wartime revenues. The European Commission is considering three options: freezing the cap at $44.10, suspending automatic adjustments until the end of the year, or limiting any increase to a maximum of $60.

These measures are expected to be part of a 21st sanctions package against Russia, which the bloc aims to finalize in early June. The package may also include sanctions on Russia's shadow fleet—which currently moves approximately 70% of seaborne Russian oil—as well as cryptocurrency operators and firms in China, India, and Turkey that assist Moscow in circumventing restrictions. The proposed price cap ceiling may also serve as a compromise for a stalled full maritime services ban on Russian oil.