In May 2025, the average monthly price of the Urals crude oil, Russia's major export oil brand, was approximately ***** U.S. dollars per barrel, having decreased from the previous month. In 2020, the price of the Urals experienced a considerable decrease at the beginning of the year due to the coronavirus (COVID-19) pandemic, dropping to as low as **** U.S. dollars per barrel in April. What is the purpose of the Russian oil price cap? In early December 2022, the G7 (Canada, France, Germany, Italy, Japan, United Kingdom (UK), and the United States), the European Union (EU), and Australia formed the Price Cap Coalition and imposed a price cap of 60 U.S. dollars per barrel on oil originating in Russia. The aim of the price ceiling is to decrease Russia’s earnings from oil exports and thereby limit the Russian government’s budget to finance the war in Ukraine. At the same time, the cap is meant to ensure that Russia continues to supply oil to emerging economies, though at a discounted price. With the cap in place, Russia cannot sell oil at a higher price even to third countries if the oil tankers are financed or insured by members of the Price Cap Coalition. In early February 2023, a price cap of 100 U.S. dollars per barrel was imposed on Russian refined oil products. Global dependence on Russian oil China was Russia’s leading crude oil export destination, with the value of exports measured at nearly **** billion U.S. dollars in 2021. In physical terms, Russia supplied around *** million metric tons of crude oil to China in 2024, being the leading crude oil import origin in the country ahead of Saudi Arabia. Furthermore, European countries were major consumers of Russian oil prior to the war in Ukraine. For instance, Russia accounted for over ** percent of oil and petroleum products imported into Slovakia in 2020. To compare, the dependence rate stood at nearly ** percent in Lithuania, ** percent in Germany, and ** percent in the UK.

In March 2024, the average monthly price of very low sulfur fuel oil (VLSFO) stood at ***** U.S. dollars per metric ton. The price of VLSFO is strongly influenced by external factors, such as the price of crude oil and market forces of supply and demand. In the past two years, two separate events have had a profound effect on the price of VLSFO: the International Maritime Organization (IMO) sulfur cap on fuel oil in 2020 and, more recently, the Russian invasion of Ukraine and the Israeli invasion of Gaza. Effects of the 2020 IMO sulfur cap In January 2020, a new limit on the sulfur content in fuel oil was introduced by the IMO. The goal of the cap was to reduce the concentration of sulfur in the air, thus reducing air pollution and preventing harm to marine ecosystems as well as protecting human health. Ship operators were forced to switch to VLSFO to comply with the new regulation, leading to a higher demand for VLSFO which in turn caused the price of VLSFO to increase to *** U.S. dollars per metric ton in January 2020. Shortly afterward, the world was hit with the outbreak of the COVID-19 pandemic. With production facilities shutting down worldwide, maritime transport considerably slowed, driving the price of VLSFO to a historic minimum of *** U.S. dollars per metric ton in April 2020. Escalating conflict in Ukraine could raise fuel prices After the Russian invasion of Ukraine in February 2022, most of the West reacted by imposing sanctions on Russia to weaken its economy. Although vital for the Russian economy, the Russian oil industry remained untargeted by direct sanctions during the first days of the invasion. However, sanctions cutting off Russia’s access to international financial markets and the SWIFT payment system, as well as divestments of Western oil companies from the Russian oil industry, could severely impact the country’s oil sector. In 2020, Russia was the third-largest producer of crude oil in the world, accounting for about ** percent of the world’s crude oil production. Disruptions to the Russian oil industry could, therefore, have consequences for the supply of oil to the global market and drive prices up. Since crude oil is the main component of VLSFO, an increase in the price of crude oil will most likely lead to a rise in the price of VLSFO.