EU loosens third-country Russian LNG ban, extends oil price cap in sanctions

EU member states agreed to their 21st package of sanctions against Russia on July 23, including a one-year freeze to their oil price cap, carving out allowances for LNG transfers and more shadow tanker listings, according to an EU Council spokesperson and Commission President Ursula von der Leyen.

New restrictions include freezing the EU's Russian oil price cap at its current threshold for another year, von der Leyen said in a statement on X, calling the intervention a way to stop Moscow from benefiting from market shocks. The move will fix the cap at its current level of $44.10/barrel and pause a floating calculation mechanism adopted by the EU last year.

Based on prevailing market rates that have surged on the back of the Middle East conflict, the price cap was expected to increase by more than $10/b in the EU's scheduled review this month, which was deferred from mid-July to allow lawmakers to finalize the new sanctions package.

In addition to the price cap freeze, approved measures target vessels assisting Russia's shadow fleet, and also include transaction bans for 32 banks, the Commission president said.

"At a time when Ukraine has built military momentum, our sanctions continue to weaken the economic foundations of Russia's war effort," von der Leyen said.

An EU Council spokesperson told Platts, part of S&P Global Energy, that the package included a "derogation for LNG transfers" without offering further details. Under previous EU sanctions, EU companies were set to be banned from selling Russian LNG to third countries.

However, under the new agreement, member states reportedly decided to allow EU companies to continue transporting Russian LNG to third countries outside the EU for a 12-month period, which could be extended, the Financial Times reported, citing three diplomats with knowledge of the move. Quantities, however, would be capped at 2025 levels, the FT said.

Isaac Levi, a policy specialist at the Centre for Research on Energy and Clean Air, a think tank, criticized the carve-out for failing to go further on limiting Russian LNG activities. "This merely kicks the ball down the road and squanders the EU's leverage over Russia's LNG trade, whose Achilles' heel is its reliance on specialized Arc-7 vessels overwhelmingly controlled by Western owners," he said.

A separate social media post from the Irish Presidency of the EU Council confirmed an agreement had been reached on the new sanctions, aimed at "targeting Russia's revenue streams, impeding its shadow fleet and disrupting its supply chains." The statement did not offer further details on the formal text.

Sanctions appetite

The package, which required unanimous approval from EU countries, had been held up in recent weeks. Lawmakers insist the bloc remains committed to tougher restrictions on Moscow regardless of external factors like the Middle East war, but proposals have undergone a series of revisions amid opposition from member states and ongoing energy security discussions.

In oil, the bloc had previously proposed an outright ban on maritime services supporting Russia's crude trade, a measure that would effectively supersede the price cap, but has since watered down its plans pending approval for coordinated action across G7 countries.

After Hungarian Prime Minister Viktor Orban, a strong opponent of cutting Russian energy ties, ended his 20-year premiership in May, the Commission had vowed to revisit blocked sanctions proposals and double down on new measures. However, surging energy prices linked to the war in the Middle East have intensified debates over new restrictions that could further curtail trade flows and push prices higher.

The UK, which has broadly mirrored EU restrictions, chose to defer its own ban on jet fuel and diesel made from crude imported from third countries, estimating that the measure could cost local businesses GBP130 million in a higher-price environment. Drone attacks on Russian refineries and subsequent export bans have underscored the country's lasting influence on the global market, with traders estimating that lost flows have added $15/b-$20/b to already-high diesel cracks.

In LNG, the EU has already committed to fully end its own trade in Russian LNG from the start of 2027, under a major law passed at the start of this year. Russian pipeline gas imports are set to end in the autumn of 2027. However, its seaborne trade remains robust. Since the start of 2026, the EU has imported 10.3 million metric tons of LNG -- equivalent to about 14.2 billion cubic meters of gas -- from Russia, accounting for about 18.2% of its overall LNG imports so far in 2026, according to S&P Global Energy CERA data.