EU shelves $45 Russian oil price cap as Israel–Iran war agitates markets

Brussels is concerned that Israel’s air campaign against Iran could spark further volatility in global oil prices. The proposal, originally scheduled for discussion on June 16 by EU’s foreign ministers, now appears “unworkable” because of the war in the Middle East.

“Given the international situation in the Middle East and the instability overall, the idea of lowering the price cap likely will not be realized,” one source said. 

“At the recent G7 summit, every country agreed they’d prefer to wait. Prices were close to the [existing] cap, but now they’re fluctuating too much.”

The measure, first proposed by Ukraine and incorporated into the 18th EU sanctions package released earlier in June 2025, is designed to reduce Kremlin oil revenues by billions of dollars—funds that Moscow uses to support high military spending and ease budget deficits. However, experts have warned that without U.S. involvement, the cap’s effectiveness remains in doubt.

“Lowering the cap without the agreement of the United States will not be effective,” Maria Shagina a sanctions expert at the International Institute for Strategic Studies. She also noted that nearly 90% of Russian oil is sold above the current $60 cap.