A Capping Mechanism Under Pressure from Surging Prices
Established in late 2022, the G7 price cap aimed to reduce Russian revenues without triggering a global market shock. Third countries can buy Russian crude below the threshold using Western shipping and insurance services. Initially set at $60 per barrel, the cap was lowered to $47.60 to reflect lower average prices, then revised down to $44.10 in January 2026. Crude oil remains a central geopolitical negotiating tool: Alberta bets on its oil wealth as leverage in trade talks with Trump.
The mechanism provides for an automatic semi-annual review, calibrated to keep the cap 15% below the average market price for Urals crude. With Brent trading at around $93 per barrel on Monday, the mechanical application of the formula would push the cap well above current levels at the next review. Analysts have raised their 2026 average price forecasts by 40%, to around $90 per barrel, since February. The European Commission is therefore examining a voluntary freeze at $44.10 to decouple the mechanism from overheated international prices.
Russian Revenues at Their Highest Level in Two and a Half Years
Up to 30% of seaborne Russian crude is still traded under the cap, while the remainder moves via a shadow fleet operating outside Western oversight mechanisms. The closure of the Strait of Hormuz — which accounted for one-fifth of global oil and gas flows before the war broke out on February 28 — gave Moscow additional budgetary relief through higher prices. Despite a 7% decline in physical export volumes, the higher valuation of oil sold outside the cap has more than offset the volume drop.
Revenues from Russian fossil fuels peaked in spring 2026 at 734 million euros per day — their highest level in two and a half years — according to data compiled by the KSE Institute (Kyiv School of Economics). For April 2026 alone, Russian state tax receipts on crude extraction reportedly reached 7.8 billion euros, calculated on the basis of a Urals market price indexed to the international price surge. These figures illustrate the budgetary headroom available to the Kremlin, which maintaining the cap at $44.10 is designed to erode.
A $60 Absolute Ceiling and the Stalled Maritime Services Ban
The Commission may also propose introducing an absolute ceiling of $60 per barrel for all future reviews, regardless of prevailing average prices, diplomatic sources said. This measure would represent a compromise against the stalled idea of a full ban on Western maritime services for Russian oil — an option that would have ended the capping mechanism altogether. EU member states adopted the legal basis for the ban in the last sanctions package, conditioning any decision on its phase-in on prior G7 coordination.
That coordination remains complex: the United States, unlike the rest of the G7 and its allies, did not sign on last year to the moving price cap formula. The 21st sanctions package, of which the cap freeze proposal could form a part, is expected to be finalized ahead of the July review against a backdrop of persistently elevated international prices.