EU rules out mass-balancing to comply with Russian oil import clampdown

The EU has issued guidance on its upcoming import ban on oil products made from Russian crude that will prohibit refiners from mass-balancing feedstock blends and expect importers to provide guarantees of origin, it announced Oct. 16.

The decision to suspend imports of Russian crude processed in third countries marked a key policy pivot for the EU as part of its 18th sanctions package, as it has vowed to close a regulatory loophole that left it free to import large volumes of supplies refined in India and Turkey.

Effective from Jan 21, 2026, the regulation has left uncertainty over the future sourcing strategy of Russia's largest crude buyers -- India, China and Turkey. India and Turkey alone supply roughly 400,000 b/d of refined products into Europe, acting as key sources of diesel and jet fuel. However, traders have warned that the impact of new regulations will depend on enforcement practices in a market that is notoriously challenging to police.

The new FAQ document from the EU confirmed that importers will be required to exhibit that imports of refined products, captured under the bloc's combined nomenclature code 2710, were not produced using Russian crude oil, demanding that operators establish robust due diligence processes to demonstrate compliance.

Importers are advised to insert clauses in their supply contracts demanding a guarantee of non-Russian crude oil origin from suppliers to present to customs authorities. The EU will take a low-tolerance approach to imports from refiners known for mixing Russian crudes with other feedstock, and set out clear guidelines on which cases would be permitted.

If third-country refineries can provide evidence of physical segregation of the processing of different feedstocks, trade of non-Russian streams may continue. If no separation is possible, refiners must demonstrate a pause in their Russian oil processing for at least 60 days, the guidelines state.

The EU will not accept mass-balancing, an approach that would involve foreign refiners processing mixed crude types and demonstrating that proportionate volumes of non-Russian crude are used for exports. Before the publication of the text, European traders were on alert for clarification around mass-balancing, warning that a softer stance could water down enforcement efforts.

Country-level exemptions

The new guidance provides several country-level exemptions to minimize the administrative burden and avoid over-compliance that could impact the bloc's energy security, the document said.

EU partner countries such as Canada, Norway, the US, the UK, and Switzerland remain free from additional requirements to demonstrate proof of crude origin, alongside oil-producing nations classified as net exporters.

Using net trade flow data from the International Energy Agency from 2024, the text listed 81 countries considered net exporters. However, it reserved the right to demand evidence of crude origin if national authorities have "reasonable grounds to believe" that oil was refined using Russian supply, including cases where oil producers are deemed to be importing "disproportionate" volumes of Russian crude.

A de-minimis exemption will exempt cased where small volumes of Russian oil are left in containers or tanks. EU vessels and aircraft will also not be required to verify the origin of bunker fuel or jet fuel, and transshipments of products to third countries remain exempt.

The prohibition applies only to products under CN code 2710 produced from Russian crude oil and does not cover other petroleum derivatives. In emergencies, ships carrying refined Russian origin products can still enter EU ports.

The new guidelines largely failed to budge ICE Gasoil futures, which have proven sensitive to supply-side concerns around Russian flows linked to new sanctions and Ukrainian drone attacks. The November contract for the European distillates benchmark settled at $643/mt Oct. 16, up from $637.75 the previous day, but had dropped to $619.5/mt by 0900 GMT Oct. 17.

Nevertheless, the new guidance signals an attempt to crack down on sanctions loopholes after months of speculation from traders on enforcement policies. Two Singapore-based sources, who preferred not to be named, said that the complicated new due diligence process would prevent them from attempting the arbitrage supplies, unless prices jump significantly.

A drop in Indian exports into Europe could deprive the market of a key source of distillate with strong cold properties, supporting jet prices if refiners are forced to blend more supply into the diesel pool.

A European distillates trader, who was not authorized to comment publicly, said that Latin America could provide a new outlet for Indian diesel, and could boost its own exports into the EU market. A trade reshuffle demanding longer journey routes would support freight rates, he said, adding further upside to global oil benchmarks.