The European Union starts applying a new automatic and dynamic mechanism for price adaptation of the Oil Price Cap for Russian crude for the first time from 15 January.
The new price cap for Russian crude oil is $44,10 per barrel, effective 1 February. Starting 15 January, old contracts concluded under the previous price cap can be executed for 90 days.
Under the 18th sanctions package the cap was lowered from $60,00 to $47,60 with an automatic and dynamic mechanism introduced to set the future price cap for crude oil. The new mechanism ensures that the cap is always 15% lower than the average market price for Urals crude in the previous reference period (22 weeks).
Constraining Russia’s energy revenues has consistently been, and will remain, a top priority for the EU, with the view of weakening Moscow’s ability to wage its illegal war of aggression against Ukraine.
The price cap will be subject to regular review every six months by the Commission, although extraordinary reviews are possible where duly justified by developments in the oil markets or other unforeseen circumstances. The Commission is in regular contact with EU Member States, as well as with international partners, to ensure close coordination on the measures.
The G7 Oil Price Cap Coalition established an oil price cap mechanism on Russian seaborne crude oil and petroleum products in 2022. EU operators are only allowed to provide maritime transport and related services for Russian crude oil and petroleum products if sold at or below the relevant price caps. This mechanism was specifically designed to put further pressure on Russia’s oil revenues, while keeping global energy markets stable through continued supplies.
