New limits from February: EU to lower price cap on Russian oil
15 January 11:17
The European Union will lower the price cap on Russian oil from $47.6 to $44.1 per barrel, according to the EU’s official journal, as reported by Komersant.
The new limit will take effect on February 1. A transition period is provided for contracts concluded before that date. Transactions under these contracts must be completed no later than April 16, 2026.
The EU and the G7 countries introduced a price cap on Russian oil in December 2022 as part of sanctions for the invasion of Ukraine. Initially, it was set at $60 per barrel. The measure was intended to limit the Kremlin’s ability to finance the war. Third countries can buy Russian oil using the services of Western companies only if they comply with the established limit.
In July 2025, the price cap was made “floating.” Now it must be 15% below market prices. As a result, the limit was lowered to $47.6 per barrel in September. Currently, adjustments are being made as part of an automatic procedure.
According to the Russian Ministry of Economic Development, in December, the average price of Russian Urals oil fell to $39.18 per barrel for the first time in five years. Due to US President Donald Trump’s sanctions against Rosneft and Lukoil, discounts on this brand reached record levels since the start of the war: up to $28 per barrel to Brent in the Baltic Sea ports and up to $26 in the Black Sea, according to Argus statistics. As a result, the average price of Russian oil fell to its lowest level since May 2020 ($31.03), when the pandemic was raging around the world and the global oil market experienced an unprecedented collapse.
De facto, the price of oil has returned to the levels of Vladimir Putin’s first term ($41.73 per barrel in 2004) and remains almost $20 below the level set in the 2026 budget ($59 per barrel).
In January-November last year, the federal treasury lost every fifth ruble of oil and gas revenues, and in December, their decline accelerated to 49% in annual terms, according to Reuters.
The Russian Ministry of Finance has budgeted 8.9 trillion rubles in oil and gas revenues for the current year. But in reality, with current prices and discounts, they will be 1.1-1.4 trillion rubles lower (7.5-7.8 trillion), economist Dmitry Polyovoy predicted. As a result, the budget deficit, which is planned at 1.6% of GDP, could reach 2.5-2.7% of GDP.
