UK & EU Lower Russian Oil Price Cap to $47.60 Per Barrel

The UK, in coordination with the European Union, has introduced a reduced Oil Price Cap on seaborne Russian crude oil, lowering the ceiling from $60 to $47.60 per barrel. The new cap comes into effect today, Tuesday 2 September 2025, at 23:01 (BST).

This latest measure is designed to further restrict Russia’s oil revenues and curb its ability to finance the ongoing war in Ukraine. By tightening the price cap, the UK and its allies aim to strengthen the impact of sanctions on the Kremlin’s war machine while maintaining stability in global energy markets.

Wind-down period for existing contracts

To support UK businesses during the transition, the UK government has confirmed a 45-day wind-down period. Any trades with an effective contract date before 23:01 (BST) on 2 September 2025 that comply with the previous $60 cap may continue until 23:01 (BST) on Friday 17 October 2025.

From that date forward, all trades must comply with the new $47.60 per barrel limit. Any contracts signed after the cut-off today will automatically fall under the revised cap.

Updated OFSI guidance & compliance requirements

The Office of Financial Sanctions Implementation (OFSI) has published new FAQs (154 to 161) to assist market participants in adapting to the lowered cap and understanding the wind-down process. Businesses must continue to meet the existing reporting and attestation requirements set out in the Oil Price Cap General Licence.

• Read OFSI’s new FAQs

• Updated Oil Price Cap General Licence

• Full OFSI Oil Price Cap guidance

Strategic impact of oil price cap

The adjustment underscores the UK’s commitment to maintaining pressure on Russia’s energy revenues, which remain a critical source of funding for its military aggression. The move follows ongoing coordination with G7 and EU partners to enforce sanctions that are both economically impactful on Russia and manageable for global markets.