Divergence in Western strategy
Washington authorized transactions in Russian diesel until April 7, 2027, and extended Lukoil asset exemptions to April 24, 2027, just as the EU expanded its sanctions list by adding nearly 1,600 companies and executives in mid-October. I find this divergence problematic because the effectiveness of sanctions depends on how consistently those who impose them stand by their decisions, as economist Vakhtang Partsvania wrote in Riddle. The US-Israeli war on Iran, which began in late February, changed market conditions by pushing up world prices and narrowing the discount on Russian oil. Following this, the Treasury’s Office of Foreign Assets Control issued general licenses in the spring that covered only Russian oil and fuel already loaded on tankers, but these licenses became a more durable practice by the autumn. This US shift undermines the pressure the West once applied to countries like India, China, and Turkey. In August 2025, Washington slapped a 25% tariff on Indian goods because of its Russian oil purchases, and later sanctions on Rosneft and Lukoil forced India’s refiners to rethink their suppliers. India’s imports of Russian crude fell to 1.2mn barrels a day in January 2026, but they climbed back to nearly 2.5mn barrels a day by July, even though New Delhi promised in February to stop buying in return for the removal of the tariff. While Russia’s oil and gas budget revenues fell 17% year-over-year in the first nine months of 2026, the US retreat limits the deterrent effect for others. Two of the three tankers carrying Russian diesel to the US under the current deal turned away with no buyers in early November as American importers balked at the legal and sanctions risks.
EU jurisdiction and the energy crisis
The EU cannot replace American pressure on third countries through secondary sanctions or tariffs. While Brussels listed foreign banks, crypto platforms, oil traders, port terminals and refineries like Indonesia’s Karimun oil terminal, it lacks the jurisdiction to punish foreign entities for energy deals. The 20th sanctions package in April restricted industrial equipment to Kyrgyzstan to prevent re-export to Russia. Georgia imported 643,000 tonnes of Russian crude worth $270mn between January and August 2026, and by July, EU sanctions covered 673 shadow fleet tankers. After being listed, the operator of Georgia’s Kulevi refinery switched to non-Russian crude. I find the EU’s inability to match US reach a major flaw in the Western strategy. EU countries continue buying Russian LNG, with deliveries from Yamal LNG rising 9.5% year-over-year in the first nine months of 2026 to 12mn tonnes worth €7.9bn. The bill for these deliveries reached €8.7bn by the end of October, even as the ban on Russian LNG under long-term contracts remains due on January 1, 2027. Hungary’s Prime Minister Peter Magyar linked the Russian-US diesel arrangement to Budapest’s bid to extend its own US exemption for Russian oil imports. This divergence over how much economic pain the West is prepared to inflict threatens the sanctions regime’s coherence and credibility.
