Trump Plans Major Oil Sanctions on Russia, Seeks EU Action First

European Union Intensifies Sanctions Against Russia

The European Union is preparing its 19th round of sanctions against Russia, targeting a wide range of sectors including oil, cryptocurrency platforms, and banking systems. These new restrictions are designed to further isolate Moscow from the global financial system and cut off its access to critical resources. The package also includes measures that affect companies in China and India, which have been accused of facilitating the movement of Russian crude oil. This comes as pressure mounts from former President Donald Trump, who has indicated he is prepared to impose significant sanctions on Russia’s oil exports if the EU fails to act.

Trump has emphasized the need to cut off the energy revenue that funds Vladimir Putin’s war in Ukraine, urging Europe to take immediate action. He warned that any potential U.S. sanctions would only be enacted if European countries matched the level of pressure being applied. Despite the EU’s earlier efforts to reduce reliance on Russian oil, crude imports have dropped significantly, from 27% before the war to just 3% last year. However, natural gas continues to flow into Europe, particularly to Hungary and Slovakia, which were granted temporary exemptions.

New Restrictions Target Banks, Crypto Platforms, and Refineries

The EU’s latest sanctions draft includes six Russian banks and energy firms, along with a complete block on Russia’s credit card systems. The package also introduces new rules aimed at crypto exchanges that continue to do business with the Kremlin. These platforms, which are currently unnamed, are reportedly being used to move funds tied to Russian energy companies that are already under older restrictions.

In addition to these measures, the sanctions target refined products made from Russian crude, which could impact India and Turkey—two countries that process large volumes of Moscow’s oil and send diesel back into the European market. The U.S. has proposed a plan for the Group of Seven (G7) that includes tariffs of up to 100% on Chinese and Indian imports, both of which continue to purchase oil from Russia. The Trump administration is pushing G7 leaders to act quickly, aiming to disrupt the networks that enable Russia’s crude trade.

Challenges for the EU and Implications for Hungary and India

For the European Union, this situation presents a complex challenge. While they have criticized Russia, they still rely heavily on Chinese markets and are working to finalize a trade deal with India. Hungary, in particular, faces a difficult position. Prime Minister Viktor Orban has long supported Russian energy, and his country could suffer significant losses if the current exemptions disappear. Hungary has also deepened its ties with Chinese manufacturing, especially in the electric vehicle and battery sectors.

Andras Deak, a researcher at the National Public Service University in Budapest, noted that the U.S. could potentially put Orban in a difficult position regarding Russian energy if it chooses to act. Companies like Mol Nyrt., which supplies Slovakia’s only refinery, could face severe consequences if direct energy sanctions are imposed.

Despite these challenges, Hungary is exploring alternative energy sources. Recently, Orban signed a 10-year deal with Shell Plc for 2 billion cubic meters of gas, a symbolic gesture given the country’s annual needs. He also traveled to the UAE and Qatar to discuss alternative fuel supplies. Previous diversification efforts, such as projects with Azerbaijan and a pipeline through Croatia, may offer some relief if Russian imports are completely cut off.

India Faces Pressure Over Russian Oil Imports

On the Indian coast, another development highlights the growing scrutiny of Russian oil imports. A Suezmax tanker named the Spartan, carrying 1 million barrels of Russian Urals crude, approached Mundra port, operated by the Adani Group. The vessel had previously been sanctioned by the EU and UK for facilitating Russian oil shipments. It is expected to be one of the last sanctioned ships to unload at Adani’s terminal before a new ban takes effect.

Adani Ports and Special Economic Zone Ltd., the operator of Mundra, issued an internal advisory stating that no vessels sanctioned by the U.S., EU, or UK will be allowed to dock starting immediately. However, the rule does not apply to ships already en route when the policy was announced. The Spartan appears to fall into this category.

Over the first eight months of this year, Mundra processed about 180,000 barrels per day of Russian oil, compared to the 1.6 million barrels daily flowing into India overall from Russia. Much of this oil is sent to refineries run by Indian Oil Corp. and HPCL-Mittal Energy Ltd.