In a significant escalation of its sanctions policy against Russia, the European Union (EU) proposed on June 10, 2025, a ban on refined oil products made from Russian crude and a reduction of the G7’s price cap on Russian oil from $60/barrel to $45/barrel. This marks a major shake-up in EU sanctions for the first time since 2022, reports S&P Global.
Price Slump
A significant selloff in the crude oil market during April has intensified calls for an adjustment to the price cap imposed on Russian oil, as legitimate rates have consistently fallen below the 60perbarrel(/b) threshold.
Russian Urals Crude Below Price Cap: Platts, part of S&P Global Commodity Insights, assessed Russia’s Urals crude on a Free On Board (FOB) Primorsk basis at $56/b on June 9. While this represents its highest level since April 3, it remains notably below its 2024 average of $66/b. This sustained period of Urals crude trading below the $60/b price cap has effectively granted Russian exporters the liberty to legally ship their crude, attracting new buyers into the market.
Shifting Buyer Landscape: India and China have consistently been Russia’s largest crude consumers. However, in a notable development in May, Japan imported its first Russian cargo since 2022. Concurrently, Turkey’s Tupras appears to have stepped back from its commitment to find new supplies.
Calls for a Lower Price Cap: “It is understandable why the EU wants to lower the cap, as with Brent in the mid-$60/s, the $60/b existing price cap has been rendered moot,” commented Ronald Smith, partner at Emerging Markets Oil & Gas Consulting Partners. This sentiment highlights the ineffectiveness of the current $60/b cap when global benchmark prices like Brent are trading higher, allowing Russian crude to be sold below the cap but still at a profitable level for Russia.
Shadow Fleet Clampdown
In response to the challenges posed by the ‘shadow tanker’ network, the European Union is proposing a further clampdown in conjunction with its lower price cap initiative.
EU’s Proposed Crackdown: Under its latest proposal, the EU has suggested blacklisting an additional 77 tankers that are linked to the secretive shipping network, which is known for selling oil above the existing price cap. If approved, this would bring the bloc’s potential sanctions list to a total of 419 vessels. This move aligns with the EU’s broader strategy to target entities enabling Russia’s illicit oil trade and to prevent Russian crude from reaching the EU market via indirect routes through refined products.
The Expanding Shadow Fleet: However, analysts are expressing skepticism about the effectiveness of these measures, warning that policymakers may struggle to keep pace with the sheer size and growth of the shadow fleet. According to a joint study conducted last month by S&P Global Commodity Insights and Market Intelligence, the number of crude and product tankers utilized globally to transport sanctioned oil reached an astounding 940 in May. This represents a significant annual increase of approximately 60%, highlighting the rapid expansion of this clandestine shipping network.
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Source: S&P Global
