The UK government has announced that it will ramp up economic pressure on Russia with fresh measures directly targeting Putin’s critical oil revenues.
The action will lower the Crude Oil Price Cap from $60 per barrel to $47.60, directly hitting Russia’s oil revenues, which have already fallen 35% year-on-year to May.
The aim is to clamp down on Putin’s oil industry, driving down the market value of Russian crude oil and hurting a crucial source of funding for the Kremlin’s illegal war in Ukraine.
The Crude Oil Price Cap, introduced in December 2022, is a measure to limit the Kremlin’s ability to finance its war against Ukraine, and prohibits G7 companies from shipping, insuring, or otherwise servicing Russian oil sold above $60 per barrel. Now, the UK and EU are lowering this to $47.60 per barrel, directly slashing Putin’s oil profits.
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.
Oil exports are one of Russia’s key vulnerabilities: energy revenues account for around 30% of total federal revenues, which in turn fund Russia’s war machine.
Speaking at the G20 in South Africa, Chancellor of the Exchequer Rachel Reeves said the move was necessary as part of a just and sustainable peace in Ukraine, and a step towards security and prosperity in the UK and beyond
“The UK and its EU allies are turning the screw on the Kremlin’s war chest by stemming the most valuable funding stream of its illegal war in Ukraine even further,” she said.
“This decisive step to lower the Crude Oil Price Cap will target Russia’s oil revenues and ramp up the pressure on Putin by exploiting his biggest vulnerability, while keeping energy markets stable.”
The government is giving UK businesses time to adapt to the lower price cap. The lowered Oil Price Cap of $47.60 per barrel comes into effect at 23:01 (BST) on 2 September 2025.
Additionally, for any trades with an effective date of contract before this date, and which are compliant with the existing price cap of $60 per barrel, there will be a wind-down period of 45 days, ending at 23:01 (BST) on 17 October 2025.
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