EU may keep Russian oil price cap unchanged at $44 per barrel to pressure Moscow

• Brent crude is trading around $93 per barrel, but the Commission may propose capping any future price review at a maximum of $60 per barrel regardless of market conditions
• Only 30% of seaborne Russian oil is still traded under the price cap mechanism, while the rest moves through a 'shadow fleet' outside Western shipping and insurance services
• The Strait of Hormuz closure has disrupted one-fifth of global oil and gas flows, causing oil prices to spike and analysts to raise 2026 price forecasts by 40% to around $90 per barrel since February

Summary

The European Commission is considering maintaining the G7 price cap on Russian crude oil at $44.10 per barrel during its July review, according to EU diplomats. This proposal is part of the EU's forthcoming 21st sanctions package targeting Russia over its war in Ukraine.

Key Details:

The price cap mechanism was initially established in late 2022 at $60 per barrel to reduce Russian revenue without triggering oil price shocks. The cap was subsequently lowered to $47.60 and then to $44.10 in January to reflect declining average oil prices. Under the system, third countries can purchase Russian oil at the capped price using Western shipping and insurance services. Currently, up to 30% of seaborne Russian oil trades under the cap, while the remainder moves via shadow fleets.

Market Context:

Russia has recently benefited from higher oil prices following the closure of the Strait of Hormuz—a critical shipping lane that previously handled one-fifth of global oil and gas flows before the conflict began on February 28. Brent crude futures are currently trading around $93 per barrel, with analysts raising 2026 average price predictions by 40% to approximately $90 per barrel since February.

Policy Implications:

The Commission may also propose capping any future price reviews at $60 per barrel regardless of market conditions, anticipating sustained high prices throughout the year. This measure could serve as a compromise to the stalled proposal for a complete ban on Russian oil, which received legal basis approval but requires further G7 coordination before implementation.