EU prepares package to attack products made from Russian oil from 2026

The European Union is moving to hit Russia where it hasn’t before, by blocking the physical flow of oil into its markets.

The new sanctions will take effect in January and are designed to cut off fuels that were made in third countries using Russian crude, even if those fuels weren’t directly shipped from Russia.

This change will directly affect refiners in India and Turkey, two countries that have become Europe’s backdoor for diesel since the original ban on Russian imports.

These refiners have been buying discounted oil from Russia, turning it into diesel, and then selling that fuel to the European Union. They supply roughly 250,000 barrels a day, about 15% of Europe’s diesel imports.

That flow will now be restricted, putting new pressure on already tight fuel supplies. Diesel stocks at Europe’s Amsterdam-Rotterdam-Antwerp hub are now at their lowest level in three years for this season, and the region’s own output is falling due to refinery shutdowns.

Diesel imports fall as prices rise

Europe is already feeling the crunch. Diesel futures surged recently, hitting $110 per barrel, with traders scrambling to cover the gaps left by the earlier ban.

There’s also a change in the kind of oil that refineries are working with. Many European plants have replaced Russia’s Urals blend with lighter grades from the United States. These are harder to convert into diesel. On top of that, there’s been a surge in natural gas liquids flooding the refining system.

While the EU clamps down on imports, Russia is dealing with a separate problem; its currency. The rouble has jumped 45% against the US dollar since the start of the year. That makes it one of the top-performing currencies globally, but it’s not great news for the country’s economy. When oil revenues come in dollars, and the rouble is too strong, the government ends up with fewer roubles to spend.

Businesses in Russia are also complaining that the strong rouble makes their goods too expensive in international markets. This surge is mostly driven by the central bank’s tight monetary policy, as well as optimism after US-Russia talks in February sparked hopes of a settlement in Ukraine.

Deposit rates on roubles are now above 20%, which is attracting investors and savers. Meanwhile, imports into Russia have slowed down, easing demand for foreign currency.

The Russian rouble is finding its place in the market

The falling value of the US dollar is also playing a role. Since President Donald Trump announced his “Liberation Day” tariffs on April 2, the dollar index has dropped 6.6%, giving the rouble more room to run. The Bank of Russia, which claims to allow a floating exchange rate, has been quietly selling off Chinese yuan, its only real intervention tool, to support the rouble. When the rouble gains on the yuan, its exchange rate against the dollar also strengthens, closing any arbitrage gaps.

A stronger rouble makes imports cheaper, which helps fight inflation, but it doesn’t help much when your biggest exports are suddenly being blacklisted. The EU’s new restrictions raise another issue: how they plan to track what fuels were made using Russian crude.

That part is still a gray area. One option would be to block all fuel from any refinery that uses Russian oil at all. A softer plan would be to calculate what share of crude input was Russian and only block that same portion of refined products.

So if a refinery used 40% Russian crude, only 40% of its diesel would be off-limits. But enforcing that isn’t going to be easy. The logistics are complex, and the risk of cheating is high. On top of that, other oil producers are stepping up.

Guyana, Brazil, and Canada are all increasing production, and members of OPEC+ are adding about 410,000 barrels per day each month. That could create an alternative supply pool for Europe when the ban kicks in next year.

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