EU Considers Temporary Freeze on Russian Oil Price Cap Amid Middle East War

The European Union is considering a temporary freeze on the price cap for Russian oil due to the war in the Middle East. Sources informed Bloomberg agency about this.

Last year, the EU approved a dynamic mechanism that automatically sets the price limit every six months at 15% below the average market price for Russian Urals oil. The current threshold is 44.1 dollars per barrel, with a review scheduled for late summer. Under this limit, European companies are prohibited from providing services, such as insurance and transportation, for oil sold above the set threshold.

Oil prices have risen due to the war in Iran and the closure of the Strait of Hormuz. During the next review in July, the level is likely to increase to at least 65 dollars, exceeding the previous 60-dollar threshold set by the G7. A freeze would allow the price limit to remain at its current level. Other options include suspending the dynamic increase until the end of the year or capping any increase at 60 dollars.

This move would be part of the EU's 21st package of sanctions, which is expected to be agreed upon and officially proposed in early June. Ambassadors of EU member states were informed of these plans last week. The new package may include measures against Russia's military-industrial complex and its «shadow fleet».