EU and UK Apply New Dynamic Mechanism to Lower Russian Crude Oil Price Cap
On 15th January, 2026, both the European Union and the United Kingdom confirmed that the Russian crude oil price cap has been lowered from $47.60 to $44.10 per barrel, following the first application of the EU’s automatic and dynamic adjustment mechanism, as outlined in our update of 20th July, 2025.
The new dynamic mechanism (first introduced as part of the EU’s 18th sanctions package) recalculates the price cap every 22 weeks, ensuring it remains 15% below the average market price for Urals crude. The resulting cap of $44.10 per barrel will take effect on 1st February, 2026 in the EU and at 23:01 on 31st January, 2026 in the UK.
Under the EU measures, contracts that are compliant with the previous cap of $47.60 per barrel benefit from a transition period of 90 days, calculated from 15th January, 2026.
Under the UK measures, crude oil contracts signed at the previous cap of $47.60 before 23:01 on 31st January, 2026 will be subject to a wind-down period, provided that the Russian crude oil is offloaded at the port of destination by 22:59 on 16th April, 2026.
This only applies to the crude oil price cap. The price caps of $100 on high-value refined oil products, such as diesel and petrol, and $45 on low-value refined oil products, such as fuel oil, remain unaffected.
Further information can be found here:
Oil_Price_Cap_-_Publication_Notice_s__-__Amendment_of_15_January_2026.pdf
If Members have any questions in relation to the above issues they are invited to contact the Club for further information.
- Author
- Charlotte Murphy
- Date
- 15/01/2026
