EU Plans to Cut Russian Oil Price Ceiling to $45 Amid Sanctions

The European Commission (EC) has proposed reducing the price ceiling for Russian oil from its current $60 per barrel to $45. This initiative, reported by the Financial Times on May 27, 2025, is part of the 18th package of EU sanctions aimed at further constraining Moscow’s financial resources in light of the ongoing conflict in Ukraine. Discussions around this proposal are already underway at the G7 level, and its implementation could significantly impact Russia’s energy export revenues.

The proposed reduction in the oil price ceiling reflects a strategic effort to increase economic pressure on Russia, which has managed to circumvent prior sanctions. According to OilPrice.com, Russian oil exports to countries outside the price ceiling coalition, such as China and India, surged by 24% in 2024, helping to offset some of the financial losses incurred from earlier restrictions. The 18th sanctions package also includes targeted measures against the shadow fleet of tankers utilized for transporting Russian oil, along with additional restrictions on the financial sector. Notably, the EU had previously suggested lowering the price ceiling to $50 per barrel, but the current discussions are leaning toward a more drastic adjustment.

Implementing a lower price ceiling could pose a significant challenge to the Russian economy. The Center for Research on Energy and Clean Air (CREA) reported that Russia’s revenue from seaborne oil exports dropped to €20.3 billion in 2024, marking a 23% decline compared to pre-sanction levels. The new price ceiling might compel Russia to increase export volumes to sustain its revenues, potentially intensifying competition in the global market and driving down world oil prices. However, Russia has already adapted to sanctions by leveraging a shadow fleet and redirecting supplies to Asian markets, which may diminish the overall effectiveness of such measures.