The EU and the UK have agreed to lower the price cap on Russian oil in a move to further clamp down on the Kremlin’s ability to wage war on Ukraine.
The EU has agreed to lower the cap on seaborne oil exports to $47.60 from $60 a barrel as part of what its foreign policy chief, Kaja Kallas, called “one of [the] strongest sanctions packages against Russia to date”.
The package includes restrictions on Russian pipelines and banks, as well as tech exports to the country.
Kallas said: “We are putting more pressure on Russia’s military industry, Chinese banks that enables sanctions evasion, and blocking tech exports used in drones.”
The EU said it will ensure the moving cap is always 15% lower than the average market price for Urals crude, the main Russian export blend. EU member states bought an estimated €21.9bn (£18.1bn) of Russian oil and gas in 2024.
The new cap will apply from 3 September, meaning that companies – insurance brokers and shippers inside the EU and the UK – cannot act to facilitate sales above the cap.
The EU’s European affairs ministers applauded at a meeting in Brussels when the latest sanctions against Russia were finally agreed on Friday, after Slovakia gave up its veto. The central European country had been blocking the measures because it objected to EU plans to phase out Russian fossil fuels.
The UK announced soon after that it was joining the new lower cap. The chancellor, Rachel Reeves, who is attending a meeting of G20 finance ministers in South Africa, said: “The UK and its EU allies are turning the screw on the Kremlin’s war chest by stemming the most valuable funding stream of its illegal war in Ukraine even further.
“This decisive step to lower the crude oil price cap will target Russia’s oil revenues and ramp up the pressure on Putin by exploiting his biggest vulnerability – while keeping energy markets stable.”
The UK government said it is “taking decisive action to cut off Putin’s oil supply pipeline” and that it has so far sanctioned more than 250 ships responsible for transporting Russian energy supplies.
The original cap was introduced in December 2022 by the G7 group of countries, but Donald Trump’s government is not willing to sign up.
The EU has also introduced a ban on investing in the Nord Stream 1 and 2 gas pipelines.
Nord Stream 1 was rendered unusable in September 2022 after a series of underwater blasts for which no one has claimed responsibility.
Nord Stream 2 never received a licence. However, Russia has expressed interest in reviving the gas projects connecting Russia and Germany. The pipelines were added to the sanctions list to dissuade European investors from returning to the projects.
The EU also imposed new measures targeting Russia’s shadow fleet – poorly maintained tankers that enable the country to sell oil to countries such as India in defiance of western restrictions. After the G7 and EU introduced the original price cap, European shipping companies sold dozens of old vessels that could be re-registered abroad.
As part of the latest sanctions package, a further 105 vessels were banned from accessing EU ports and services, such as insurance, in an attempt to stop the trade, bringing the total of sanctioned vessels to 447.
Ukraine’s president, Volodymyr Zelenskyy, welcomed the measures as “essential and timely, especially now, as a response to the fact that Russia has intensified the brutality of the strikes on our cities and villages”.
Reuters reported Kremlin spokesperson Dmitry Peskov as saying: “We have repeatedly said that we consider such unilateral restrictions illegal, we oppose them.
“But at the same time, of course, we have already acquired a certain immunity from sanctions, we have adapted to life under sanctions.”
