EU Weighs Freeze on Russian Oil Price Cap as Iran War Roils Markets

The European Union is considering a temporary freeze on its Russian oil price cap, currently set at $44.10 per barrel, as the Middle East conflict disrupts global crude markets, according to people familiar with the discussions. The bloc’s dynamic mechanism, which resets the cap every six months at 15% below the average market rate for Urals crude, faces a scheduled review in July 2026. Surging oil prices driven by the Iran war and the effective closure of the Strait of Hormuz could push the renewed cap to at least $65 per barrel, exceeding the previous $60 threshold set by the Group of Seven. The freeze would keep the cap at its current level. Other options include suspending automatic increases until year-end or capping any rise at $60. The proposal forms part of the EU's 21st sanctions package since Russia's full-scale invasion of Ukraine. The bloc aims to finalize new measures in early June, also targeting additional banks, oil traders, and a covert fleet of vessels used to transport Russian crude. Sanctions require unanimous backing from all member states, and maritime nations have previously resisted changes to the price-cap mechanism.