EU, UK push for lowering Russia oil price cap

Time of India

28-05-2025

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The European Union and the UK are pushing for a lowering of the oil price cap — a key economic sanction against Russia.
The price cap is currently set at $60 (€52.7) per barrel of oil and has been in place since December 2022.
Its provisions mean shipping and insurances services from G7 group of advanced economies and EU nations, which dominate global shipping, are not provided for the transit of Russian oil unless the oil is being sold at or below the level of the cap.
The EU is currently working on an 18th package of sanctions against Russia, having released its 17th package earlier this week. European Commission President Ursula von der Leyen has confirmed that the EU and Britain were hoping to convince its G7 partners to lower the oil price cap for the next package.
European Commission spokesperson Olof Gill told DW that discussions on the price cap were ongoing with G7 partners and confirmed that any lowering of the cap would require unanimity among EU member states. The EU has not publicly revealed what level it believes the cap should be changed to, but various reports have suggested $50.
Brent crude, a global benchmark, has been trading at close to $65 per barrel recently, while Russian oil has traded between $55 and $59 in April and May, just below the cap.
The idea behind lowering the cap is to reduce the amount of money Moscow makes from its legitimate sales of seaborne crude oil. The oil price has fallen sharply throughout 2025, and Brent crude itself is now only a few dollars above the price cap of $60.
US hesitation is 'frustrating'
G7 finance ministers met in Canada last week (May 20-22), where discussions on the lowering of the cap took place. They released a statement condemning Russia's "continued brutal war"and said if efforts to achieve a ceasefire failed, they would explore "further ramping up sanctions."
However, news agency Reuters quoted an unnamed European official at the talks as saying the US is "not convinced" about lowering the price cap and that falling oil prices are already hurting Russia.
Since the start of the war in 2022, there has been uncertainty over oil sanctions in both the EU and US over the prospect of disrupting supply and driving up energy prices for their own consumers.
Yuliia Pavytska, manager of the sanctions program at the Kyiv School of Economics, told DW that ongoing hesitation on sanctions from the Trump administration was "frustrating," But she commended both the EU and UK for continuing to take action.
She believes the Russian economy is especially vulnerable at present, and that now is the time for more decisive action.
"The cumulative imbalances caused by sanctions and the war, coupled with falling oil prices, are now reaching a critical point," she said. "This is why we believe our partners should seize the moment and intensify sanctions efforts to exploit Russia's growing vulnerabilities."
Price cap must be enforced better, regardless of level
A major focus of recent sanctions packages has been on dealing with Russia's so-called shadow fleet— hundreds of aging tankers bought by Moscow to evade the price cap.
The ships are typically bought through third parties and then transport oil around the world using opaque or illegitimate insurance schemes.
The Biden administration began sanctioning individual tankers, with the EU and UK joining. Now, more than 700 tankers have been sanctioned, but the US has not sanctioned any since
Donald Trump
returned as US president.
Recent data shows the sanctioning of tankers has forced Russia to use its mainstream fleet more and more, which means legal obligations to comply with the price cap.
Experts have said that increases the urgency of the need to lower it.
"A lot more Russian oil is being transported on G7 insurance," Vaibhav Raghunandan from the Centre for Research on Energy and Clean Air told DW. "So it does seem like the correct time to react to that by lowering the cap."
However, he and others who have been monitoring the sanctions picture closely over the past few years have said the biggest issue with the price cap is not the price itself but rather enforcement.
"Current enforcement measures are not up to the mark," said Raghunandan, adding that measures for checking compliance are "very lax."
There has been extensive "attestation fraud" in relation to the cap, namely tankers with falsified paperwork, suggesting the oil has been sold in compliance with the cap when it has been sold above the rate.
"Attestation documents have to basically be filled by the traders themselves, but there is no bank statement verification," Raghunandan explained.
"All of this needs to change for better enforcement of the price cap itself. You can put the price cap at a dollar a barrel if you want, but if you can't enforce it, it makes no sense."
Pavytska agrees, saying that lowering the cap alone will "not reduce Russia's revenues unless we ensure that the trade is actually conducted in compliance with it."
Both Pavytska and Raghunandan agree that responsibility for providing credible pricing data should fall to the buyers of Russian oil, rather than those transporting it, as is currently the case.
Oil price plunge leaves Russian economy vulnerable
Pavytska underlined that the whole point is to reduce the amount of revenue Moscow gets from its oil, to "reduce its capacity to finance the war in Ukraine." She firmly believes that the falling oil price, which represents a big change from the strong prices which prevailed in 2023 and for much of 2024, gives Ukraine's allies a clear opportunity to seriously dent Russia's economy.
In her opinion, lowering of the price cap as well as options to restrict the export of Russian oil altogether must be considered. With the global market now on a "strong downward trend," the sanctions coalition would have an "opportunity to take more decisive steps," including measures that would restrict the supply of Russian oil.
"This could finally push Russia's energy revenues to a critically painful level," she said.