Oil price drop bellow $60 renders Russian price cap ‘irrelevant’

The Kremlin can now largely disregard the G7’s price cap on Russian oil exports, as the global benchmark price has fallen below $60 a barrel.

The $60 cap, introduced in late 2022 when oil was trading above $100 a barrel, aimed to curb Moscow’s oil revenues used to fund its war in Ukraine—without disrupting global markets by enforcing a full export ban.

Under the measure, G7 and EU countries were prohibited from buying Russian oil priced above $60 or from providing services such as shipping, insurance, brokerage, and trade finance for deals exceeding that threshold.

Russia managed to sidestep the price cap through various loopholes, notably by deploying a shadow fleet of aging oil tankers to transport crude at prevailing market rates. Despite these workarounds, experts estimate the cap still cost the Kremlin around €34 billion in export revenues during its first year—equivalent to about two months of income.

However, a sharp drop in oil prices over the past week, driven by recession fears, has rendered the cap “effectively meaningless.”

Clayton Seigle, a senior fellow at the Center for Strategic and International Studies (CSIS) in Washington DC, told The Guardian that the G7 may now consider “tightening the screws” on Moscow by lowering the cap further.

“I would personally support reducing the cap even more,” Seigle said. “There may be an appetite within the G7 to do so as a way to punish Moscow—especially now that concerns about market undersupply have eased. But ultimately, it’s a political decision.”