The EU lowers the price cap on Russian oil to $44.1 per barrel
The European Union has decided to lower the price cap on Russian oil from $47.6 to $44.1 per barrel. This was announced in the EU's official journal, published on Thursday, 15 January, according to DW. The new rules will take effect on 1 February 2026. For contracts concluded before that date, there will be a transition period lasting until 16 April.
The EU and G7 price cap mechanism has been in place since December 2022 as part of sanctions for Russia's full-scale aggression against Ukraine. Initially, the limit was $60 per barrel and allowed third countries to purchase Russian oil using Western services only if they complied with the set price.
In July 2025, the price cap was made floating. According to the current formula, it must be 15 per cent lower than market prices. It was under this automatic procedure that the limit was lowered to $47.6 in September and now to $44.1 per barrel.
Sanctions pressure has already had a significant impact on Russian oil revenues. According to the Russian Ministry of Economic Development, in December, the average price of Urals crude oil fell to $39.18 per barrel. This is the lowest figure in the last five years. Discounts on Russian oil in Baltic ports reached $28 to Brent, and in the Black Sea to $26.
Analysts note that the actual price of Russian oil is almost $20 lower than the level set in the Russian Federation's budget for 2026, where the estimated price is $59 per barrel. According to Reuters estimates, in January-November last year, Russia's federal budget lost every fifth rouble of oil and gas revenues, and in December the decline accelerated to 49 per cent on an annualised basis.
Experts warn that at current prices, the Russian budget deficit could grow from the planned 1.6% to 2.5-2.7% of GDP. To cover it, the government will have to make more active use of the National Welfare Fund, whose liquid reserves are estimated at about 4.1 trillion roubles. Under current conditions, these reserves may only last for one and a half to two years.
Russia has legislated a ban on oil supplies at prices set by the EU. At the same time, the European Union itself plans to completely abandon imports of Russian oil by the end of 2027. Currently, the exceptions are Hungary and Slovakia, which continue to purchase oil via pipeline routes.
