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Energy reckoning: How Europe can use US sanctions to cut Moscow’s oil ties
ECFR | English | AcademicThink | Nov. 7, 2025 | Geopolitical Conflict and Disputes
On 22 October 2025, the U.S. Treasury’s Office of Foreign Assets Control (OFAC) imposed sanctions on Russian oil giants Rosneft and LUKoil, adding them to the Specially Designated Nationals list. These sanctions freeze assets in the U.S. and target external institutions maintaining significant ties with the companies, threatening secondary sanctions. General licenses permit certain transactions until 21 November 2025, but the move poses risks for European refineries dependent on these companies, while also offering Europe a strategic chance to reduce energy reliance on Russia.
The sanctions impact Russia’s four largest oil producers controlling about 75% of oil output and 80% of exports, aiming to reduce critical revenue streams supporting Moscow’s economy and military. Some Chinese and Indian firms have suspended Russian oil purchases, exacerbating fiscal pressure. In Europe, Rosneft owns key German refineries, now under German trusteeship but with legal complexities remaining. LUKoil controls important refineries and retail networks in Romania and Bulgaria, where it remains a large economic player, complicating EU sanctions enforcement.
Despite the EU’s embargo on Russian seaborne oil and pipeline supplies, Hungary and Slovakia continue to rely heavily on Russian oil, using exemptions to maintain imports. US sanctions might force LUKoil to suspend supplies to these countries, but political efforts seek exemptions. Russia is attempting to circumvent sanctions by selling LUKoil International to commodity trader Gunvor, whose co-founder remains sanctioned due to Kremlin ties, raising concerns about sanctions evasion and continued Russian influence.
European countries are urged to use U.S. sanctions as a legal and political opportunity to seize Russian energy assets, aligning with the EU’s REPowerEU goal to end energy dependency on Russia. Germany, in particular, should avoid exemptions and move toward fully nationalizing Rosneft’s assets. EU states, especially Bulgaria and Romania, should remove LUKoil from their energy sectors and transfer assets to European firms to reduce Russian leverage. The EU must block the LUKoil-Gunvor deal to maintain sanction effectiveness and energy security.
Failure to fully enforce sanctions or grant exemptions, especially requested by Hungary, risks undermining Europe’s energy security and market reform efforts. The recent US sanctions present a critical moment for Europe to accelerate energy diversification and phase out Russian capital from strategic sectors, reinforcing sovereignty and reducing vulnerability to Moscow’s influence.