The European Union has adopted its 18th package of sanctions against the Russian Federation, including the implementation of a dynamic price cap mechanism for Russian seaborne crude oil.
The cap has been reduced from the fixed $60 per barrel to a floating rate set at 15% below the average price of Russian crude over the previous 22 weeks.
The initial level is approximately $47.6 per barrel and will be subject to semi-annual reviews.
The sanctions package, approved by EU foreign ministers on July 15, 2025, also reinforces enforcement mechanisms and addresses methods used to circumvent existing restrictions.
It introduces prohibitions on 105 vessels associated with Russia’s so-called shadow fleet, and bans any transactions involving the Nord Stream 1 and Nord Stream 2 pipeline infrastructure.
Restrictions have also been extended to a Russian-linked oil refinery in India, two financial institutions in the People's Republic of China, and a flag registry facilitating Russia’s evasion tactics.
The Russian Direct Investment Fund (RDIF), with an estimated capital of $10 billion, and 22 Russian banks are also subject to new transaction bans under the sanctions framework.
The measures aim to address ongoing gaps in enforcement, with only 36% of Russian seaborne crude being transported in December 2024 by vessels subject to the G7 cap.
The G7 price cap, introduced in December 2022, prohibits Western service providers from offering insurance, financing, or shipping services for Russian crude sold above the threshold.
According to EU High Representative Kaja Kallas, “When sanctioned, Russia’s shadow fleet tankers cannot dock in ports and Russia has to find new vessels. This costs some more and runs down their profits.”
The G7 introduced a $60 per barrel price cap in December 2022. Despite the cap, Russian Urals crude often traded above $60 throughout 2023–2024, with prices ranging between $64 and $84, aided by a fleet of unregulated tankers operating outside the G7 framework.
In June 2025, the European Commission proposed reducing the cap to $45 per barrel; however, the proposal was delayed due to geopolitical developments in the Middle East.
By July 2025, as Brent crude prices fell below $70, support grew within the EU for a more adaptive mechanism. The dynamic cap was ultimately endorsed, following negotiations involving Slovakia, which had initially opposed stricter energy-related restrictions.
Nord Stream AG is a joint-stock company headquartered in Zug, Switzerland. It was established in 2005 to construct and operate the Nord Stream 1 pipeline, transporting natural gas from Russia to Germany via the Baltic Sea. The company is majority-owned by Gazprom, a Russian state-controlled energy corporation. It also owns the Nord Stream 2 pipeline, which was completed but never became fully operational due to regulatory and geopolitical factors, including EU sanctions and suspected sabotage in 2022.
Rosneft Oil Company is an open joint-stock company headquartered in Moscow and controlled by the Russian government. It is one of the world’s largest publicly traded oil producers, operating across exploration, extraction, refining, and distribution. Rosneft holds equity in multiple international ventures, including a stake in Nayara Energy, which owns a refinery in India implicated in the EU sanctions package.