September, 2025: Sanctions against Russia and Iran: UK and EU’s lower oil price cap comes into force; and E3 initiate ‘snapback’ process in respect of Iranian sanctions

Lowering the crude oil price cap

As set out in our July article, on 18th July, 2025, the UK and EU announced that the oil price cap in respect of crude oil would be lowered from $60 to $47.60 per barrel. By way of update to our July article, the lower price cap has now come into force in the UK and EU, such that for any trades with an effective date of contract after 23:01 (BST) on 2nd September, 2025 the new price cap of $47.60 will apply. There are certain wind-down or transitional periods in respect of contracts entered into before 23:01 on 2nd September, 2025 in the UK, or before 20th July, 2025 in the EU.

The US and other G7 members have still not as yet followed the EU and UK. The price cap for crude oil in those jurisdictions therefore still currently remains at $60 per barrel.

The price caps in relation to high-value refined oil products (such as diesel and petrol) and on low-value refined oil products (such as fuel oil) remain the same, i.e. $100 and $45 per barrel respectively.

Dynamic price cap amendments

As further detailed in our July article, the EU has also introduced a ‘dynamic automatic procedure’ to modify the price cap for Russian crude oil depending on the average market price.

The EU has recently updated its FAQs on the oil price cap, explaining further how the price cap is set and how it will be regularly reviewed. This includes monitoring and assessing the average market price of Russian crude oil, which will be first published on 15th January, 2026 and every six months thereafter. In addition, by 15th April, 2026, and every six months thereafter (unless circumstances require an earlier assessment), the European Commission will assess the functioning of the price cap mechanism. This will be “in coordination with the Price Cap Coalition” (i.e. G7 members and other participating countries). The Commission will then report its findings to the Council and propose amendments as appropriate. Any amendment of the oil price cap needs to be adopted by the Council with unanimity.  

E3 Joint Statement on Iran: Initiation of the Snapback Process

On 28th August, 2025, the Foreign Ministers of France, Germany, and the United Kingdom (E3) issued a joint statement (available here: https://www.gov.uk/government/news/e3-joint-statement-on-iran-initiation-of-the-snapback-process ) reaffirming their commitment to preventing Iran from acquiring nuclear weapons. The statement explained that despite the United States' withdrawal from the Joint Comprehensive Plan of Action (JCPoA) in 2018 and Iran's subsequent non-compliance since 2019, the E3 continued diplomatic efforts to preserve the agreement.

However, as Iran has exceeded JCPoA limits on enriched uranium and other nuclear materials, restricted IAEA monitoring, and failed to comply with other obligations under the JCPoA, the E3 have now formally notified the UN Security Council of Iran's significant non-performance under the JCPoA, thereby initiating the 'snapback' mechanism as per UNSC Resolution 2231. This process opens a 30-day window before previously lifted UN sanctions may be reinstated.

The E3 emphasized that the sanctions are not new but were previously lifted in light of Iran's commitments under the JCPoA. They have stated that they remain open to diplomatic engagement during this period to seek a resolution and restore Iran's compliance.