EU targets foreign refiners, Russian energy companies with new sanctions proposal

The EU has proposed further clampdowns on Russia's foreign oil buyers, major energy companies and dozens of new shadow tankers in its 19th sanctions package, officials announced Sept. 19.

In a televised address, European Commission President Ursula von der Leyen said that new measures will target refineries, oil traders and petrochemicals companies purchasing Russian oil abroad in breach of existing EU policy.

Third-country target will include China, raising pressure on the Kremlin's second-largest oil buyer.

Proposed measures include a full transaction ban on major Russian energy companies Rosneft and Gazprom Neft, and also place an asset freeze on other companies supporting Russia's war economy, von Der Leyen said.

Rosneft and Gazprom Neft had already been saddled with partial restrictions, including sanctions on Rosneft's shipping arm and India's Vadinar refinery, a significant foreign asset and sink for Russian crude.

A major US sanctions package in January directly targeted Gazprom Neft and companies in which it held a 50% stake or above, putting growing pressure on satellite companies including Serbian refiner NIS.

In the year 2025 to date, the two companies have been responsible for supporting some 2 million b/d of oil from Russian ports, according to S&P Global Commodities at Sea data.

Between them, Gazprom, Gazprom Neft and Rosneft operate 20 Russian refineries with a combined crude processing capacity of close to 3 million b/d.

Additionally, the EC has pushed to clamp down on enforcement of its newly adjusted oil price cap, which was adjusted lower on Sept. 3 for the first time since 2022.

The commission has identified 118 new "shadow tanker" vessels found to have breached the price cap and proposed adding them to a current blacklist of 442.

A statement from EC Vice President Kaja Kallas said the new sanctions package would ban the re-insurance of listed vessels in an effort to boost enforcement.

"Our message is clear: if you enable Russia's war and try to dodge our sanctions, you will face the consequences," she said.

The sanctions package will now be submitted to EU member states for final approval, which requires unanimous agreement among the 27 countries.

Third-country focus

Tougher measures from the EU follow a push from the US to target Russia's largest oil buyers, China and India, with secondary sanctions, and reflect a growing willingness to shut in Russian supply.

After Russia's full-scale invasion of Ukraine in February 2022, EU sanctions had deliberately left the door open for Russia to ship its oil to countries outside the bloc, fearing price spikes if exports were suspended entirely.

However, recent policy decisions have reflected a growing willingness to target international trade flows, with an incoming EU import ban on refined products made from Russian oil in 2026.

"Russia's oil revenues in Europe have gone down by 90%. We are now turning that page for good," von Der Leyen said.

"The proposed 19th sanction package demonstrates that the EU is increasingly ready to go after entities in third countries that do business with Russia," said Tanya Stepanova, an associate oil research director at S&P Global Commodity Insights.

"We already saw a glimpse of this in the 18th sanction package when the EU sanctioned Nayara Energy's Vadinar refinery in India, four companies in Turkey, and seven companies in China, including two banks," she said.

Responsible for around a third of Russian government revenues, oil exports have been a core focus for regulators in attempts to put strain on the economy, which is already struggling with crippling stagflation and resource shortages.

Tougher sanctions, persistent Ukrainian drone attacks and high military spending have already put pressure on the country's oil sector, delaying upgrades on major refineries and taking swathes of fuel capacity offline.

According to CAS data, Russian refined product exports fell by almost 10% month over month in August, dropping to 1.2 million b/d, with further declines expected in September.

"We won't stop putting pressure on Russia until it ends its war," Kallas said.

Successive sanctions have failed to erode the value of Urals crude in recent months, which on Sept. 18 reached its narrowest discount to Dated Brent since the war began. Platts, part of Commodity Insights, assessed the discount for Russia's flagship oil grade at minus $11.20/b, the lowest differential since the day after the full-scale invasion of Ukraine on Feb. 24, 2022.