In mid-October 2026, Western sanctions policy toward Russia revealed a striking contradiction. On October 12, the European Union approved the largest single expansion of its sanctions listings since the start of the full-scale war, adding nearly 1,600 Russian companies and executives from the military-industrial complex. Almost simultaneously, Washington moved in the opposite direction: the United States authorized transactions involving Russian diesel fuel until April 7, 2027, extended sanctions exceptions for overseas filling stations and certain Lukoil assets until April 24, 2027, and President Donald Trump used his executive authority to decline to impose the “hell sanctions” envisaged under the recently passed Lindsey Graham Act.
These contradictions—signals of which we noted as early as this spring—point to a more fundamental problem: the EU and the United States are increasingly diverging over how much economic pain sanctions pressure on Russia can reasonably inflict. What is especially notable is that this divergence has emerged just as sanctions against Russia appeared to be producing more tangible results. By the end of 2025, the cumulative effect of European restrictions, reinforced by U.S. sanctions against Rosneft and Lukoil, had coincided with market conditions unfavorable to Russia. Discounts on Russian crude, increasingly complicated export logistics and payments, declining oil and gas revenues, and a growing budget deficit were creating conditions for further pressure on the Kremlin.
The U.S.-Israeli war against Iran, which began in late February 2026, dramatically changed the situation. Disruptions to supplies through the Strait of Hormuz pushed global prices higher and narrowed the discounts on Russian oil. At the same time, Washington began expanding exceptions to its sanctions regime, justifying the move by the need to stabilize energy markets. Russia unexpectedly received a reprieve precisely when accumulated restrictions might have created more serious financial difficulties.
This does not mean, of course, that U.S. sanctions have ceased to work, or that favorable oil market conditions have erased all the effects of sanctions pressure. Despite higher oil prices, Russia’s oil and gas budget revenues fell by 17 percent year on year in the first nine months of 2026. But what is happening raises questions that go far beyond individual general licenses issued by the U.S. Treasury. How sustainable can sanctions policy remain if one of its key participants begins to ease restrictions? How do such decisions affect the behavior of third countries and businesses’ assessment of sanctions risk? And can the European Union offset the consequences of American concessions, or is the divergence between the two strategies gradually becoming an independent factor weakening sanctions pressure on Russia?
From temporary relief to a new U.S. approach
In spring 2026, the first U.S. relaxations of oil sanctions looked like a forced response to the energy crisis triggered by the war with Iran. Washington sought to increase the supply of oil on the world market and prevent prices from rising further. The concessions were initially narrow: general licenses from the U.S. Treasury’s Office of Foreign Assets Control (OFAC) permitted the sale of Russian oil and petroleum products already loaded onto tankers by specified dates. This made it possible to release existing volumes without opening the way to new supplies. Yet the Treasury repeatedly extended and adjusted the exceptions, the latest phase of which ran only until June.
By autumn, U.S. policy had gone beyond the original emergency measure. The relaxation of restrictions on Russian diesel, the extension of exceptions for Lukoil’s overseas assets, and the decision not to impose the new sanctions and tariffs envisaged under the Graham Act suggest a more durable practice of easing restrictions. The contradictions are evident not only between the United States and the EU, but also within the American political system: the Graham Act won bipartisan support in Congress, while the authorization of trade in Russian diesel drew criticism from Democrats and some Republicans. Moreover, a bipartisan bill has been introduced in Congress to block the relevant OFAC authorizations.
The most significant consequences of these decisions may be felt far beyond the United States. As early as August 2025, Washington imposed an additional 25 percent tariff on Indian imports in response to India’s purchases of Russian oil, while subsequent sanctions against Rosneft and Lukoil forced India’s largest refiners to reassess their relationships with Russian suppliers. In January 2026, India’s imports of Russian oil fell to roughly 1.2 million barrels per day, but by July they had risen again to nearly 2.5 million. This was helped both by supply disruptions in the Middle East and by the temporary U.S. sanctions relief. Purchases recovered even though India had committed in February to stop buying Russian oil in exchange for Washington’s removal of the additional tariff.
Trump’s decision not to impose the new sanctions and 100 percent tariffs envisaged under the Graham Act against the largest buyers of Russian oil now removes the immediate threat of another major source of pressure. That does not mean, however, that sanctions risks have disappeared for Indian, Chinese, or other foreign companies: restrictions on Russian oil companies remain in place, as does the possibility of secondary sanctions for transactions with designated entities.
Consistent American concessions can change how international buyers assess these risks. There is also a problem with the political credibility of Washington’s demands on third countries: only recently, the United States was pressing them to reduce purchases of Russian oil under the threat of sanctions and tariffs; now it is itself authorizing transactions involving Russian energy products, including imports into the United States. Formally, these involve different commodities and legal regimes, but for India, China, Turkey, and other market participants, that is not necessarily a compelling reason to incur additional costs and forgo new opportunities. Tellingly, such arguments are now being made not only by traditional Asian buyers of Russian oil, but within the EU itself. Hungary’s new prime minister, Péter Magyar, has explicitly linked the Russian-American diesel arrangement to Budapest’s intention to secure an extension of the U.S. sanctions exception for imports of Russian oil.
Taken together, these decisions point to the emergence of a new approach by the Trump administration. Sanctions against Russia are not being lifted, but their application is becoming more selective, and Washington’s willingness to impose additional restrictions less resolute. For Russia, this means an opportunity to preserve certain channels of oil trade and potentially weaken the deterrent effect of sanctions threats on international buyers and intermediaries. The scale of these consequences remains an open question.
Europe’s response: the possibilities and limits of unilateral pressure
Against the backdrop of American concessions, the European Union continues to expand sanctions against Russia. What matters more, however, is not the number of new measures but the change in Brussels’ approach to their application. In 2026, the EU intensified pressure not only on Russian companies and banks, but also on foreign infrastructure used to circumvent sanctions. The April twentieth package, for example, was the first to invoke the special anti-circumvention tool, restricting supplies of certain categories of industrial equipment to Kyrgyzstan because of the risk of re-export to Russia.
At the same time, the EU expanded restrictions against foreign banks, cryptocurrency platforms, oil traders, port terminals, and refineries. Notable examples include Indonesia’s Karimun oil terminal, linked to servicing Russian oil shipments, and Georgia’s Kulveli refinery, which processed Russian crude. Between January and August 2026, Georgia imported 643,000 tons of crude oil from Russia worth $ 270 million. Sanctions against the shadow fleet also continued to expand: by July 2026, EU restrictions covered 673 vessels, along with the companies servicing them.
Brussels is thus extending sanctions control to international supply chains, expanding its ability to influence foreign intermediaries and participants in Russian exports. Notably, amid mounting European pressure, the operator of the Kulveli refinery announced a shift to non-Russian feedstock.
Yet here lies a fundamental difference from the American approach. European restrictions rely primarily on EU jurisdiction: they deny access to the European market, financial services, and infrastructure, but do not automatically allow the EU to punish foreign buyers for any transaction involving Russian energy. The United States, by contrast, has mechanisms of secondary sanctions and trade tariffs to pressure companies and states beyond its jurisdiction.
This difference matters most for India and China, the largest buyers of Russian oil. The EU can restrict the participation of European insurers, shipping companies, and financial institutions in servicing deliveries, and it can sanction individual intermediaries. But where alternative carriers, insurers, and payment mechanisms are used, the scope for direct European leverage shrinks. American secondary sanctions and tariffs therefore complemented European restrictions precisely where Brussels’ capabilities fell short.
European sanctions policy also faces a serious test amid the energy crisis. EU countries, for instance, continue to purchase Russian LNG. In the first nine months of 2026, deliveries from the Yamal LNG project rose 9.5 percent year on year, reaching 12 million tons worth € 7.9 billion. Formally, these purchases do not violate existing restrictions: the import ban under certain long-term contracts takes effect only on January 1, 2027. But given the strained gas market and high energy prices, the question is how firmly Brussels intends to stick to that deadline. No decision to postpone it has been made, and the phaseout of Russian gas is enshrined not only in sanctions regulations but also in separate EU legislation. The impending end of Russian LNG purchases will test the EU’s willingness to adhere to its strategy despite the economic costs.
The EU can maintain and expand its own restrictions, raising the cost of Russia’s international trade. But it will find it far harder to fully compensate for the weakening of American pressure on the largest buyers of Russian oil. Europe can preserve the resilience of its own sanctions regime, but it cannot fully replace American instruments of leverage over third countries.
Sanctions without a common strategy?
Russia’s current sanctions reprieve does not mean that Western restrictions have stopped working. They continue to limit Russian companies’ access to technology, financing, international markets, and infrastructure. But the events of 2026 have exposed a vulnerability: the effectiveness of sanctions depends not only on Russia’s ability to adapt, but also on the willingness of those who imposed them to apply them consistently.
American concessions may have consequences far beyond the transactions they directly authorize. When Washington first threatens buyers of Russian oil with sanctions and tariffs, then declines to impose new restrictions and permits imports of Russian fuel, perceptions of sanctions risk change. For India, China, and other third countries, this creates additional grounds to reassess the economic rationale for complying with American demands.
Divergence between U.S. and EU strategies can weaken overall pressure on Russia even without the formal lifting of sanctions. Sanctions affect trade not only through prohibitions, but through the expectations of banks, traders, carriers, and buyers about what regulators will do next. The less consistent sanctions policy becomes, the harder it is to sustain their effect. For some, the prospect of relief may become an incentive to resume trade with Russia; others will continue to be deterred by legal and financial risks.
For Russia, this uncertainty opens additional opportunities to preserve export revenues. But the scale and duration of the reprieve remain unclear: they depend on future oil market conditions, decisions in Washington, and the EU’s ability to maintain its restrictions. The main risk to Western sanctions policy today is not the immediate collapse of its architecture, but the gradual erosion of its coherence and credibility. As recent months have shown, the effectiveness of sanctions is determined not only by the severity of the prohibitions imposed, but by how consistently those who impose them are prepared to stand by their own decisions.
