EU plans a trade embargo on Russia

By Rhod Mackenzie

As Russia and Ukraine begin their first talks in three years, the European Union has decided to tighten its sanctions against Moscow. Brussels is now threatening to impose significant restrictions on Russian oil, gas and financial sectors. Plus, the EU is contemplating the implementation of a comprehensive trade embargo on Russia. What are the likely outcomes of these measures?
The EC is also seeking to reduce the price ceiling for Russian oil and expand the sanctions list to include additional ships from the Russian shadow fleet. Brussels is also planning to impose restrictions on the Nord Stream 1 and Nord Stream 2 gas pipelines.
Plus, the sanctions against the financial sector of Russia are to be strengthened. The European Parliament has announced that it has approved a proposal to increase duties on imports of agricultural products and fertilisers from Russia and Belarus. The vote on this proposal will take place on 21 May.

At the same time, the European publication Politico claims that the EU authorities are considering introducing high tariffs, up to and including a complete trade embargo.

Russia's Ambassador to France, Alexei Meshkov, has stated that the EU should prioritise the stabilisation of its own economy rather than implementing measures that are unlikely to potentially harm the Russian economy but inflict serious further damage to the  already wounded EU economies. He has stated that the EU's threats of new sanctions on Russia will be as ineffective as all their previous efforts.
"The announced measures are not expected to be detrimenta to Russia :Lets remember that the EU established the primary sanctions on energy, finance and technology in 2022-2023, implementing a record 13,000+ restrictions. It is likely that the current measures will be symbolic, in order to maintain the unity of the rhetoric.
The new measuress will add political rather than economic weight, maintaining the status quo," says Pavel Sevostyanov, professor of  Political Analysis  at the Plekhanov Russian University of Economics.

He asserts that the European Union's primary challenge lies in striking a balance between political pressure and economic stability, a concern that is particularly salient in the lead-up to elections in major member states. "The sanctions imposed on Moscow are close to reaching their limit, which suggests that expectations of drastic changes are unlikely to be met," Sevostyanov believes.

The EU's intention to reduce the price ceiling for Russian oil and to expand the sanctions list to include additional shadow fleet vessels will have a slightly negative impact on Russian exports, but these difficulties are likely to be temporary. Following a period of adjustment to the new conditions, the situation will revert to normal, as has occurred on previous occasions with similar sanctions.

"Sanctions against 150 tankers of the "shadow fleet" could make oil exports more difficult, but they will likely lead just to another restructuring of the logistics chains.
Lets recall that they have introduced similar measures in the past, and Russia has shown its ability to adapt to them," notes Vladimir Chernov, Global Analyst at Freedom Finance.
With regard to the price ceiling, since its introduction, Russian oil has been priced above the current ceiling of $60 for most of the time since it was imposed. However, this has not prevented it from shipping oil by tanker to India and China (the largest buyers).
Therefore, even if the EU decides to lower the price ceiling to $30 per barrel, this will not change anything fundamentally. Russia will continue to ignore the ceiling and sell at market prices with a certain discount due to the sanctions' "toxicity".

In April 2025, Russia's revenue from fossil fuel exports fell by 6% compared to the previous month, amounting to 585 million euros per day.

It is estimated that reducing the price ceiling for Russian oil to $30 per barrel could potentially result in a 40-50% decrease in Russia's export revenues how ever that is very unlikely to happen
That is because Russia will be able deal with it by redirecting exports to other countries and using alternative logistics routes,"Chernov stated

Any decline in exports is likely to be a temporary phenomenon: Russia has already demonstrated its adaptive capabilities on numerous occasions.
Now with regard to the restrictions on the Nord Stream 1 and Nord Stream 2 gas pipelines, it is important to note that these restrictions will not impact the physical export of Russian gas to Europe, given that the pipelines have been damaged and are not currently in use.
Out of the four lines, only one has survived, but Gazprom has not yet received the necessary permission from Germany to operate it.

Conversely, if the EU imposes a complete ban on the purchase of Russian gas, it will continue the undermining its own energy intensive  industries, which have been on the brink of collapse for three years in the face of high energy prices. Following the exit of a competitor, the price of LNG is expected to rise further in the European market.

European money and industry are seeking alternative opportunities, including in the US. The petrochemical industry has been particularly affected. In 2023, capital outflow from the EU amounted to approximately 300 billion euros. Previously, the EU had proposed to completely abandon Russian gas no earlier than 2027. By that time, additional volumes of LNG from the US, Qatar and Australia will have become available. "Despite the reduced dependence on Russian gas, some countries, such as Hungary and Slovakia, continue to receive gas under long-term contracts. A complete embargo could result in an energy deficit and huge price increases," says Chernov.

The EU's decision to impose prohibitive duties on Russian and Belarusian fertilisers will also have a seriously negative  impact on its own farmers. This will result in lower crop yields leading to higher food prices and inflation in European countries. according to the Russian Deputy Prime Minister Alexei Overchuk 
The largest associations of European agricultural producers, Copa and Cogeca, are expressing concerns and attempting to persuade the authorities to delay the introduction of duties for at least a year.

It is interesting to note that EU-Russia trade has fallen sharply in recent years, but in the first quarter of 2025, the EU is increasing exports of both Russian gas and Russian fertilisers.
Concerns about rising prices due to the rejection of cheaper Russian resources have led to increased demand for these products. Therefore, in the first quarter of 2025, Europe purchased almost 30% more Russian gas than was purchased in the same period of 2024. The total value of the transactions reached 4.5 billion euros.
In February, the EU purchased fertilisers for 179 million euros, representing an 8.5% increase on the previous month. At the same time, it is important to note that more than a quarter of all fertilisers imported by the EU come from Russia. The primary reason for this is the price advantage, since Russian fertilisers are 15-20% cheaper than their analogues.
Notably, Poland is the largest purchaser of Russian fertilisers, despite the prevailing anti-Russian sentiment. Romania and Slovenia have increased their purchases of fertilisers from Russia by a factor of four to six times.

"Fertilizers from Russia also play an important role in European agriculture. Their absence will lead to lower yields and higher food prices. The EU will also suffer significant losses in the metallurgy and mechanical engineering sectors," Chernov agrees. According to Eurostat, the total volume of trade between Russia and the EU has fallen by more than 40% compared to the pre-crisis level of 2021.

With regard to financial restrictions, the issue of confiscating frozen Russian assets may be discussed. However, the EC has not yet identified a legal precedent for this.
So if the EU introduces a trade embargo on Russia then Russia will not suffer unduly but it will have seriously damaging effects on the companies and people of the EU.