The European Union is currently debating the adoption of its 18th sanctions package against Russia, the key innovation of which is a new mechanism for a "floating" price cap on Russian oil. Instead of a fixed figure, the cap is to be set automatically at 15% below the current global oil price.
Experts point out that previous fixed caps (such as $60 per barrel, introduced in December 2022) remained unchanged for over a year and a half, despite volatile markets, making sanctions less effective. The new formula should allow the EU to respond more quickly to market changes and reduce Russia’s excess oil income.
However, simply setting a cap is not enough — strict monitoring and enforcement against the shadow tanker fleet, which enables sanction evasion, is essential. Some recommend requiring tankers to have insurance from Western companies, similar to measures already used by Turkey.
If swiftly implemented, the floating price cap could significantly reduce the Russian oil and gas sector's revenues, which provide about 29% of the federal budget. Analysts believe this will further pressure Russia's economy, which is already struggling with recession and budget deficits.
The success of this dynamic cap will depend on regular (semi-annual) review and effective monitoring mechanisms. Economists note the new measures could have significant social impacts, hitting Russia’s coal and metal industries, and increase public discontent due to worsening economic conditions.
