EU proposes to freeze Russian crude oil price cap at $44.1

June 3 news, the European Union is discussing a new round of sanctions against Russia, planning to freeze the current price cap of $44.10 per barrel on Russian seaborne crude oil, abandoning the increase to $65 per barrel according to the pricing formula.

The Russian oil price cap mechanism was implemented by the G7, the EU, and Australia in December 2022. The rules stipulate dynamic price adjustments every six months, with the cap set at a 15% discount to the spot average price of Urals crude oil; this standard was lowered to $44.10 per barrel in February 2026, with a new round of adjustments originally scheduled to start in July. Affected by geopolitical conflicts in the Middle East and shipping disruptions in the Strait of Hormuz, international crude oil prices have climbed above $90 per barrel. According to the calculation formula, the price cap for this round should have been raised to $65 per barrel.

To avoid Russia relying on high oil prices to obtain excess returns, the EU's alternative options include three categories: locking the current $44.10 price cap, setting a hard price ceiling of $60, or suspending price cap adjustments until the end of the year. This proposal has been included in the draft of the EU's 21st round of sanctions against Russia but has not yet taken effect; it requires consultation and a vote by member states in June.

Since February 2023, Russia has stopped supplying oil to countries implementing the price cap, with the G7's initial benchmark cap set at $60 per barrel. Even if the price cap is implemented, only 30% of Russian crude oil trade, which relies on Western shipping insurance, is constrained. Russia has already established numerous export channels bypassing the cap using a shadow fleet. Currently, the relevant content is only an internal discussion proposal, and the outcome remains uncertain.