European Union diplomats are close to reaching an agreement on a fresh set of sanctions targeting Russia’s energy revenues, with the centrepiece of the proposed 18th package being a revised and reduced oil price cap.
The latest measures are intended to constrain the Kremlin’s ability to fund its military campaign in Ukraine, now entering its third year.
According to four EU officials familiar with the confidential negotiations, the package has effectively been agreed upon at the technical level, with a formal adoption expected at Monday’s meeting of EU foreign ministers. Only one member state is reported to have retained a technical reservation, although it is not expected to block the overall agreement.
A key element of the package is the introduction of a dynamic mechanism for the oil price cap. The European Commission proposed that the cap be recalculated periodically and tied to the global market, specifically 15% below the average market price of crude oil over the previous three months. Based on current market data, the initial cap would be approximately $47 per barrel, calculated from the average price of Russian crude over the past 22 weeks.
However, rather than updating the cap quarterly as initially proposed, member states have agreed to revise the figure biannually, allowing for a more predictable framework while retaining downward pressure on Russian oil export revenues.
The current price ceiling, agreed by the Group of Seven (G7) and implemented in December 2022, is set at $60 per barrel. This level has become largely ineffective in recent months due to falling global oil futures, prompting calls from both the EU and the United Kingdom for a downward revision.
The mechanism works by prohibiting EU-based shipping, insurance, and reinsurance firms from facilitating Russian oil exports if the sale price exceeds the cap. The objective is to curtail the Kremlin’s revenue without triggering global supply disruptions. Russia has responded by relying increasingly on a shadow fleet of tankers operating under flags of convenience and non-Western insurance providers.
In an effort to counter these circumvention tactics, the new sanctions package will also target logistical and financial enablers. These include the listing of a Russian-owned refinery operating in India, two Chinese banks involved in sanction-bypassing transactions, and a shipping registry used to reflag vessels operating under opaque ownership structures.
The broader package also addresses remaining gaps in energy-related sanctions. It proposes a ban on transactions with Russia’s Nord Stream pipeline infrastructure, which, while currently inactive, remains strategically important to Moscow. The proposal includes financial entities suspected of facilitating sanctions evasion through third countries and intermediary networks.
Slovakia, which had previously delayed the agreement, is now reportedly on board after receiving assurances from the European Commission regarding the future of its Russian gas imports. Bratislava had expressed concern over the socio-economic implications of a rapid phase-out of Russian gas, given its continued reliance on pipeline deliveries.
All 27 EU member states must agree unanimously for the sanctions to be formally adopted. The consensus reached in Sunday’s meeting suggests that final approval is likely at the upcoming Foreign Affairs Council, clearing the way for implementation.
The G7 price cap mechanism remains a central component of Western efforts to weaken Russia’s wartime economy while maintaining stability in global energy markets. According to EU officials, the new floating price structure reflects an evolving strategy that seeks to maintain relevance in light of market shifts and Russia’s ongoing circumvention efforts.
This latest package follows earlier rounds of sanctions targeting Russian banking, defence industries, and individuals connected to the war. However, the focus on oil revenue continues to be seen as the most direct means of constraining Moscow’s fiscal capacity.
The proposed measures are part of a broader Western effort to close enforcement loopholes, target third-party enablers, and adapt to Russia’s shifting trade strategies. Analysts suggest that while the impact of the reduced cap may be limited in the short term, sustained enforcement and periodic adjustment could gradually erode the profitability of Russia’s energy exports.
The EU’s move comes amid continued discussions within the G7 over tightening enforcement mechanisms and increasing pressure on countries that facilitate Russian sanctions evasion through trade or financial cooperation.
If formally adopted on Tuesday, the 18th package will mark the most extensive EU sanctions revision since mid-2023, reinforcing the bloc’s long-term strategy of economic attrition in response to Russia’s invasion of Ukraine.
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