Monday Edition · Mon 19 Oct 2026
Europe Weighs Holding the Line on Russia Alone After Washington's Diesel Waiver and Wider Sanctions Pause
The United States has waived sanctions on Russian diesel sales until April 2027 and, on 16 October, set aside a broader slate of Russia energy sanctions days before they were due to take effect. European leaders say their own sanctions stay in force, but their credibility depends on closing gaps in their own energy purchases and on paying for Ukraine's needs.
Not investment advice: this article is for information only.
Chanan Zevin - Chief Editor and Head of Desks
Published
Two US moves in October
Washington has eased pressure on Russian energy twice this month. Earlier in October, President Donald Trump struck a deal for Russian diesel, and the US Treasury waived sanctions on Russian diesel sales until April 2027, according to Modern Diplomacy and the policy site toBrief, which dates the waiver's expiry to 7 April 2027. Then, on 16 October, Trump waived a broader set of Russia energy sanctions days before they were due to take effect under a law he had signed the month before, Modern Diplomacy reported. The two moves are separate and should not be confused.
What the broader waiver set aside
The measures paused on 16 October included tariffs of up to 100% on all goods entering the United States from the five largest importers of Russian oil or gas, a group that includes China and India, according to Modern Diplomacy. Analysts have long argued that such secondary penalties were the missing enforcement tool of the sanctions regime. Price caps and embargoes limit Western purchases, but only penalties on large Asian buyers can significantly reduce Moscow's revenue. Secretary of State Marco Rubio said on Saturday that the president would take up to 60 days to assess the economic impact, Reuters reported.
Oil prices fell on the news
Markets read the waivers as adding supply. Brent crude futures were down 1.3% at about $108.5 a barrel on Monday morning, Reuters reported, citing the president's decision to waive some sanctions on Russia. Brent had touched $110 on Friday for the first time since May as Iran escalated attacks in the Strait of Hormuz, Yahoo Finance reported. Chart 1 shows the two price points. Reuters noted that shipping and insurance costs were keeping prices for physical delivery much higher than futures.
Why Washington moved
The context is fuel prices at home. The US-Israeli war on Iran has driven fuel prices sharply higher, and congressional midterm elections are weeks away, Modern Diplomacy noted. US consumer prices rose 3.7% in the year to September, driven by gasoline, according to the Bureau of Labor Statistics. Easing pressure on Russian supply is one way to try to bring prices down. The administration has not framed the waivers as a change in its position on the war in Ukraine.
Europe's first response
The European Union responded quickly to the diesel deal. Euronews reported on 12 October that the EU described the Trump-Putin deal as "concerning" and insisted that sanctions on Russia would continue. The waiver allows transactions in Russian diesel under US rules, but it does not override EU sanctions or permit imports into Europe, according to toBrief. European companies remain bound by EU law regardless of US policy.
Germany holds its position
Germany said it would maintain existing sanctions on Russia and work with European partners on further measures, Deutsche Welle reported. Berlin's position matters because Germany is the EU's largest economy and a major voice on sanctions. Its stance signals that the core of the bloc does not intend to follow Washington in easing pressure, at least not while the war continues.
The European Council's statement
At the European Council summit on 15 and 16 October, leaders formally regretted the US decision to temporarily lift sanctions on Russian diesel, Modern Diplomacy reported. Council President António Costa insisted that sanctions on Moscow would remain in force until the war ends. The EU is preparing its 22nd sanctions package. The bloc's sanctions require unanimity among 27 member states, which in the past has delayed or reduced promised packages.
A record listing
The EU has also expanded its sanctions list. According to Euronews and other reporting, the bloc adopted its largest expansion of the list, covering roughly 1,600 individuals and entities tied to Russia's military-industrial complex. Listings freeze assets and ban dealings with the named parties. They are an area where the EU can act without relying on Washington, although their effect depends on enforcement in member states.
Europe's own Russian energy
Europe's credibility faces a problem of its own. Despite its near-total ban on Russian oil, the EU still imports substantial volumes of Russian gas. More than 12 million tonnes of Russian Arctic LNG reached EU ports between January and September, an increase of 9.5% on the same period last year, Modern Diplomacy reported. Hungary and Slovakia remain significant buyers of Russian crude under exemptions to the oil ban. France's LNG imports from Russia more than doubled between August and September, according to the same analysis.
The LNG ban timetable
The EU has a timetable to end those imports. Under a regulation adopted in January, short-term contracts for Russian LNG were banned from April 2026, and long-term contracts follow from 1 January 2027, Modern Diplomacy reported. Russia has expanded its fleet of LNG carriers to around 25 vessels to keep gas flowing once the ban takes effect, according to the analysis. Enforcing the ban during an energy shock linked to the Iran war would be costly, which is why analysts see it as a test of Europe's resolve.
How much the diesel matters
The economic impact of the diesel deal itself may be limited. EU Economy Commissioner Valdis Dombrovskis said the promised diesel volumes were of no macroeconomic significance and questioned whether Russia could even supply them, Modern Diplomacy reported. Energy analysts argue that the G7's decision on 2 October to release 100 million barrels from strategic reserves will matter far more for prices. On that reading, the waiver is more a political signal than an energy policy.
Who gains in Moscow
The broader waiver may matter more for Russian revenue. An economist at the Vienna Institute for International Economic Studies estimates that roughly 60 cents of every additional dollar per barrel would flow into Russian state coffers as discounts on Russian crude narrow, Modern Diplomacy reported. Kirill Dmitriev, President Vladimir Putin's envoy, greeted the waiver as a historic moment, according to the analysis. Large buyers in Asia are now less exposed to US secondary penalties.
The money question for Ukraine
Europe's ability to hold the line also depends on financing Ukraine. The EU approved €90 billion for Ukraine for 2026 and 2027, a sum now widely seen as insufficient, Modern Diplomacy reported. President Volodymyr Zelensky told EU leaders the war will cost Ukraine €155 billion next year and asked for at least €70 billion more from Europe. The summit agreed in principle that Ukraine's needs must be covered but took no decision on how. The debate over about €210 billion in frozen Russian central bank assets is likely to return.
What Europe can do alone
Analysts point to three tools within Europe's control. The first is enforcing the January 2027 LNG ban without new exemptions. The second is inspecting the shadow fleet of ageing tankers that carry Russian oil through European waters, as Britain did when it intercepted a tanker in June, according to Modern Diplomacy. The third is a multi-year funding commitment for Ukraine. None of these replaces US secondary tariffs, but each raises Moscow's costs where Europe holds the leverage.
The limits of European power
Europe is unlikely to copy the US threat of secondary tariffs against China and India. Member states lack consensus on using trade as a weapon against Beijing, and the bloc's exposure to Chinese retaliation makes such measures politically difficult, according to Modern Diplomacy, which cited Beijing's ban this summer on critical mineral exports to European defence firms after an EU sanctions package. That leaves Europe with narrower instruments than Washington had.
A reversible waiver
The US moves may not be permanent. Rubio's 60-day assessment and the April 2027 expiry give Washington options to reverse course, possibly after the midterm elections. That reversibility cuts both ways. It gives Europe hope that the transatlantic approach could return, but it also shows that a sanctions regime built on executive orders can be switched off quickly.
What to watch
Three developments will show whether Europe can hold the line. The first is the content and timing of the EU's 22nd sanctions package, and whether any member state blocks it. The second is the outcome of Rubio's 60-day review. The third is oil and diesel prices, which determine how much political pressure governments on both sides of the Atlantic face to keep easing.
Journalistic Scoop
Europe's rising Russian LNG imports hand Washington a ready rebuttal. While European leaders criticise the US diesel waiver, their own purchases of Russian gas are rising. More than 12 million tonnes of Russian Arctic LNG reached EU ports between January and September, 9.5% more than a year earlier, and France's Russian LNG imports more than doubled between August and September, according to analysis published by Modern Diplomacy.
That asymmetry matters for the politics of sanctions. Trump has accused European governments of hypocrisy, and the LNG figures give that charge support. If the EU wants to lead on sanctions without Washington, the January 2027 ban on long-term Russian LNG contracts becomes the test of credibility, because it is the one measure Europe controls entirely and that Moscow is already preparing to work around.
Sources: Modern Diplomacy · toBrief
Sources
- Modern Diplomacy, Trump Eases Russia Sanctions: Can Europe Hold the Line Alone?, 19 Oct 2026 · moderndiplomacy.eu
- Euronews, EU decries 'concerning' Trump-Putin deal, insists sanctions on Russia will continue, 12 Oct 2026 · euronews.com
- toBrief, Russian diesel gets a US waiver, not entry · tobrief.eu
- Deutsche Welle, Germany sticks to Russia sanctions after Trump diesel deal · dw.com
- Reuters via Investing.com, S&P 500, Nasdaq futures rise, 19 Oct 2026 · investing.com
Related
- Qatar Warns the Energy Shock From the Iran War Has Yet to Peak as Lavrov Travels to Tehran
- France Counts 550,000 Marchers and Nearly 2,400 Arrests as the Budget Faces Its First Vote on Tuesday
- Texas Regulators Face Monday Deadline to Report on Abbott's Data-Centre Permit Freeze as States Inherit the Fight Over Who Pays for the Load