The EU has significantly tightened its oil sanctions regime against Russia, with the latest and most impactful measures coming into force on January 21, 2026. Here’s a detailed breakdown of the new rules and their key exemptions:
1. Expanded Import Ban: Russian-Origin Crude in Third-Country Products
What’s new?
The EU now bans the purchase, import, or transfer into the EU of petroleum products (CN code 2710) that are produced in any third country from Russian-origin crude oil (CN code 2709).
This closes the so-called “refining loophole,” where Russian crude was refined in countries like India, Turkey, or China and then re-exported to the EU as non-Russian products.
Scope:
Applies to all petroleum products under CN2710 (including diesel, jet fuel, lubricants, etc.).
Includes a ban on related services: technical assistance, brokering, financing, insurance, and reinsurance.
2. Key Exemptions and Carve-Outs
Exemption Type | Details |
|---|---|
Partner Countries | Imports from Canada, Norway, UK, US, Switzerland, Australia, Japan, New Zealand are exempt. |
Net Exporter Presumption | If importing from a country that was a net exporter of crude oil in the previous year, it’s presumed the refined product is from domestic (non-Russian) crude, unless authorities have evidence otherwise. |
Product Classification | Only products under CN2710 are covered. Products with >50% aromatics (CN2707, e.g., reformate), most residual fuel oil, and bitumen (CN2713) are exempt. |
Proof of Origin | Importers must provide evidence of the crude oil’s origin unless importing from a partner country or a net exporter. Enhanced due diligence is required for imports from high-risk countries (e.g., India, China, Turkey). |
Operational Exemptions | Bunker fuel for ships’ own use and ships seeking refuge are not covered by the ban. |
3. Additional Measures
Price Cap Lowered: The crude oil price cap for Russian exports was reduced to $47.60/bbl (from $60) as of September 2025, with a mechanism to keep it 15% below the average Urals price.
Shadow Fleet Crackdown: Over 500 vessels linked to Russian oil trade are banned from EU ports and services.
LNG & LPG: Further restrictions on Russian LNG and LPG, with limited derogations for energy security in certain member states.
4. Practical Implications
Imports of diesel, jet fuel, and other products from refineries in India, Turkey, and China are now under intense scrutiny and, in many cases, banned unless proof is provided that no Russian crude was used.
Imports from Middle Eastern and other net-exporter countries are less affected due to the presumption of domestic crude use.
Products outside CN2710 (e.g., reformate, bitumen) can still enter the EU, but many buyers are self-sanctioning and avoiding any product potentially linked to Russian crude.
Key Impacts on Imports (Jet Fuel & Diesel)
Europe
Diesel: Europe was heavily reliant on Russian diesel/gasoil. The new sanctions force the EU to source more diesel from the US, Middle East, and Asia. In 2024, the US, Netherlands, and Belgium collectively supplied over 70% of UK diesel imports, with US diesel exports to Europe rising sharply.
Jet Fuel: The EU is increasingly importing jet fuel from the Middle East (Kuwait, UAE, Saudi Arabia) and India. UK jet fuel imports rose 9.5% in 2024, with Kuwait now the top supplier (38% of UK jet imports).
United States
Diesel: US diesel exports to Europe have increased, tightening domestic inventories and supporting prices. US distillate (diesel) exports averaged ~1.3 mmbbl/d in 2024, with Europe (Netherlands, UK) as major destinations.
Jet Fuel: US jet fuel imports are modest (~109 kbbl/d in 2024, mostly from South Korea and Canada), but exports are rising, especially to Mexico and Latin America. Domestic jet fuel prices remain well-supplied, but global trade flows are more volatile due to shifting European and Asian demand.
Global Flows
Middle East & Asia: These regions are backfilling European demand for both diesel and jet fuel, while also increasing their own imports of discounted Russian products.
Supply Chain Complexity: The need for proof of non-Russian origin and compliance checks is slowing and complicating trade, occasionally causing short-term supply disruptions and price spikes, especially during geopolitical shocks (e.g., Middle East tensions).
Summary Table: 2024-2025 US Oil Product Imports (kbbl/d)
Product | Imports (2024) | Main Suppliers | Trend |
|---|---|---|---|
Diesel | 144 | Canada (95%) | ↓ (tightening) |
Jet Fuel | 109 | S. Korea (71%), Canada | ↓ (well-supplied) |
Gasoline | 651 | Canada, NL, India | ↓ |
Source: EIA, UK DUKES, IATA
Market Impact from Additional Sanctions (as of Jan 2026):
Market View: Neutral-to-Bearish for Russian Oil, Neutral for Global Prices (WTI/Brent)
Discounts Widen, Not Global Shortage:
Russian Urals crude is trading at steeper discounts to Brent (recently $30–$35/bbl below Brent), as buyers demand compensation for sanctions risk. However, global oil supply is not materially reduced—barrels are being rerouted, not removed.Market Adaptation:
Past experience shows Russian flows rebound within 1–2 months via new intermediaries, ship-to-ship transfers, and alternative shipping. China and India, while cautious, are unlikely to cut Russian oil entirely. The shadow fleet adapts, and Russia accepts lower netbacks.Global Price Impact:
Initial Brent/WTI price spikes (+$3–$5/bbl) faded as market realized supply loss is limited and OPEC+ spare capacity remains high. The global market is currently well-supplied, with non-OPEC+ (US, Brazil, Guyana) production growth offsetting Russian disruptions.Long-term Pressure on Russia:
Sanctions erode Russian oil revenues, increase logistics costs, and deepen dependence on China. Russian government budget and upstream investment are pressured, but not enough to force a change in geopolitical strategy.
Summary Table: Sanctions Impact
Factor | Short-Term (1–2 mo) | Medium-Term (3–6 mo) | Global Price Effect |
|---|---|---|---|
Russian exports (mmbbl/d) | -0.5 to -1.0 | Rebound via workarounds | Minimal |
Urals discount to Brent ($/bbl) | -$30 to -$35 | Remains wide | Neutral |
Brent/WTI price reaction | +$3–$5 spike | Fades | Neutral |
Russian budget impact | Revenue loss | Sustained pressure | N/A |
Rationale:
Sanctions are structurally bearish for Russian oil (lower revenues, wider discounts), but global oil prices are largely insulated due to market adaptation, alternative supply, and OPEC+ spare capacity. The biggest risk for a bullish price move would be strict, universal enforcement and/or a major geopolitical escalation, neither of which is currently materializing.
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