EU weighs temporary freeze on Russia oil price cap over Iran war: Report

The European Union is considering a temporary freeze to its price cap on Russian oil as the war in the West Asia continues into a fourth month, said people familiar with the matter.

The bloc adopted a dynamic mechanism last year to ensure that the price cap is automatically set every six months at 15% lower than the average market rate for Russian Urals crude. The current price threshold is $44.10 per barrel and is due for review later this summer.

Under the cap, European firms are banned from providing services such as insurance and transportation involving oil sold above the threshold.


Oil prices have soared as a result of the Iran war and the effective closure of the Strait of Hormuz. The next price cap review in July would likely see the level rise to at least $65, higher than the previous $60 threshold set collectively by the Group of Seven, said the people, who spoke on condition of anonymity to discuss private deliberations.

The freeze would keep the price cap at the current rate. Other options under consideration include suspending dynamic and automatic increases until the end of the year in light of the exceptional circumstances in the Middle East, or capping any rise to $60 back in line with the G7 level, the people said. Bloomberg