EU Lowers Russian Oil Price Ceiling

The new limit will go into effect on February 1.

The European Union will lower the ceiling on the price of Russian oil from $47.6 to $44.1 per barrel, as reported in the EU's official journal. The new limit will take effect on February 1. There is a transition period for contracts concluded before that date. Operations on them must be completed no later than April 16, 2026.

The EU and the G7 countries (G7) introduced a ceiling on the price of Russian oil in December 2022 as part of sanctions for the invasion of Ukraine. It was initially set at $60 a barrel. The measure was aimed at limiting the Kremlin's ability to finance the war. Third countries can buy Russian oil using the services of Western companies only if they comply with the established limit.

In July 2025, the price ceiling was made "floating". Now it must be 15% below market quotations. As a result, the limit was lowered to $47.6 per barrel starting in September. Now the adjustment is carried out as part of an automatic procedure.

According to the Ministry of Economic Development, in December the average price of Russian Urals oil fell to $39.18 per barrel - for the first time in 5 years. Due to US President Donald Trump's sanctions against Rosneft and Lukoil, discounts on the grade reached record levels since the war: up to $28 per barrel to Brent in Baltic Sea ports and $26 in the Black Sea, according to Argus statistics. As a result, the average cost of Russian oil fell to its lowest since May 2020 ($31.03), when a pandemic raged in the world and the global oil market experienced an unprecedented collapse.

De facto, the price of oil has returned to the marks of Vladimir Putin's first term ($41.73 per barrel in 2004) and holds almost $20 below the level laid out in the budget-2026 ($59 per barrel).

In January-November last year, the federal treasury lost every fifth ruble of oil and gas revenues, and in December their decline accelerated to 49% year-on-year, Reuters calculated.

In this year's budget, the Finance Ministry has budgeted 8.9 trillion in oil and gas revenues. But in fact, with the current prices and discounts, they will be 1.1-1.4 trillion rubles lower (7.5-7.8 trillion), economist Dmitry Polevoy predicted. As a result, the deficit of the treasury, which is planned at 1.6% of GDP, may reach 2.5-2.7% of GDP, while the government will have to use the balances of the National Welfare Fund to cover the shortfall in revenues, the expert warned. Now the liquid assets of the National Welfare Fund amount to Br4.1 trillion. Polevoy estimated that this may be enough for 1.5-2 years of unfavorable oil conditions.

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