On July 14, experts from the Center for Public Analytics "Vezha" discussed the new and intriguing 18th European Union sanctions package against Russia. Ivan Us, chief consultant at the Center for Foreign Policy Studies of the National Institute for Strategic Studies, outlined how the introduction of a so-called floating cap on Russian oil could impact the Russian economy.
This new price cap for Russian oil pegs the allowed price to 15% below global market value, replacing the previous fixed ceiling of $60 per barrel. However, the effectiveness of such a cap is undermined by challenges in enforcement—much of Russia’s oil is exported via a "shadow fleet" of tankers that are not subject to sanctions oversight. Even proposals to enforce insurance only through Western companies, as suggested by Turkey, do not fully solve the control dilemma.
Experts argue that sanctions will only be effective if backed by real monitoring mechanisms. Currently, oil and gas revenues make up about 29% of Russia's state budget, underlining Russia’s continued dependence on energy exports. Setting a cap at $47 per barrel (based on current global prices) could sharply reduce Russia's revenues, especially considering the relatively high production cost of Russian oil.
Minimizing sanctions evasion requires consolidated EU and US action, including the introduction of stricter US legislative initiatives proposed by senators. If effective monitoring of the shadow fleet is achieved, Russia's economy could face a significant fiscal deficit, threatening the funding of pensions, social programs, and risking broader industrial destabilization and public protests.
Even under severe sanctions, Moscow is expected to search for loopholes and alternative revenue sources—such as reprivatization, confiscations, tapping citizen deposits, and changing approaches to social payments. The EU and US must stay vigilant to maintain the pressure and the effectiveness of sanctions.
