European Union Considers Freezing Russia's Oil Price Cap

European Union (EU) is considering temporarily freezing the mechanism for adjusting Russia’s oil price cap as the Middle East conflict enters its fourth month. Citing Bloomberg on Sunday (31 May 2026), sources familiar with the discussions said the move is under consideration due to global oil price surges caused by the Iran conflict and disruptions to energy transit through the Strait of Hormuz. Last year, the EU adopted a dynamic mechanism that automatically sets Russia’s oil price cap 15% below the average market price of Urals crude every six months. Under this scheme, European companies are prohibited from providing services such as insurance or transportation for Russian oil sold above the set price cap. The oil price surge triggered by the Iran conflict and the effective closure of the Strait of Hormuz could push up Russia’s oil price cap during the next review in July. According to unnamed sources discussing internal proceedings, the review could raise the cap to at least $65 per barrel. To prevent Russia from profiting significantly from current high oil prices, the EU is considering freezing the cap at current levels. Other options under discussion include temporarily halting the automatic increase mechanism until the end of the year due to extraordinary conditions in the Middle East, or capping the maximum increase at $60 per barrel to align with G7 guidelines. The plan forms part of the EU’s latest sanctions package against Russia, the 21st since Moscow’s full-scale invasion of Ukraine in 2022. The EU aims to finalise and formally submit the new sanctions package in early June. Member states’ ambassadors were briefed on the plan last week. Around 20 additional tankers from Russia’s shadow fleet are also set to be added to the sanctions list. In future, similar sanction regimes could be expanded to liquefied natural gas (LNG) carriers to restrict the Kremlin’s ability to build a shadow fleet for LNG exports.