Why the EU faces a Russian oil vs LNG sanctions stand-off

Good morning. A scoop to start: Samsung is in talks to invest hundreds of millions of euros in Mistral, valuing the French AI start-up at roughly €20bn.

Here, I explain today’s crunch talks over a Russian LNG versus oil sanctions stand-off, and our finance correspondent reports on new threats to the EU-US trade deal.

Mari will bring you the newsletter for the next few days. I’ll be back on Tuesday.

Stand-off

EU capitals are facing a multibillion-euro dilemma over Moscow’s fossil fuel exports today, with a choice between preventing the Kremlin benefiting from a surge in crude oil revenues and curtailing a Greek shipping company’s ability to ship Russian LNG.

Context: Since Russia’s full-scale invasion of Ukraine in February 2022, the EU has used economic restrictions to curtail funding to the Kremlin’s war machine. Sanctions must be agreed by all 27 member states.

The conundrum is thus: last October, all EU capitals agreed a package of sanctions which included a measure banning, by the end of 2026, the “purchase, import or transfer, directly or indirectly” of Russian LNG.

A month later, the European Commission published a document clarifying that this prohibited Russian LNG transfer “whether the goods are destined for the EU or not”.

There is only one EU operator that the measure applies to: Greece’s Dynagas. It has transported more than 10mn tonnes of Russian LNG since the start of 2025 and has long-term contracts to supply third countries.

Greek officials argue that the issue of the sanction applying to third-country transfers was never discussed, let alone agreed, during the negotiations, and strongly dispute the Commission’s reasoning and legal interpretation.

Over the past few weeks, as capitals debated a new package of sanctions, Athens demanded the inclusion of an amendment exempting any contracts signed before Russia’s invasion from the LNG ban, allowing Dynagas to continue shipping the fuel to third countries.

That disagreement matters because one part of the new package is a measure to freeze the oil price cap — the price below which traders are legally allowed to ship Russian crude oil — at $44 a barrel. Without it, the cap will jump to around $58.

Last week, negotiations over Greece’s demand failed to reach agreement, forcing an emergency one-week cap freeze, which expires tomorrow. EU ambassadors meet today for another attempt at a compromise, fearful of a choice between reversing the LNG transfer ban or gifting Moscow $14 more per barrel of crude.

Commission officials also warn that if they were forced to amend their previous stance, it could prompt a wave of demands from other member states to adjust other sanctions guidance.

A Commission spokesperson told the FT that its November 2025 document “does not introduce a new interpretation. It reflects a longstanding principle”.

“This is consistent with the overall logic of EU sanctions. Where the legislator intends to allow certain transfers to third countries, it does so explicitly,” the spokesperson added.

Chart du jour: Mercantilists

We are living in a mercantilist era, writes Martin Wolf. And China is better suited to it than the US and EU.

Happy birthday?

Just days away from the first anniversary of the EU-US trade deal, there’s a risk that it might collapse into renewed tit-for-tat tariffs, writes Paola Tamma.

Context: A deal struck last summer in Turnberry, Scotland, saw the EU acquiesce to maximum tariffs of 15 per cent on most of its exports to the US in order to prevent a trade war with Washington.

A universal 10 per cent tariff applied in February on most US imports expires on Friday, and US President Donald Trump is planning to replace it with fresh tariffs of up to 12.5 per cent on products from 60 countries.

A separate US investigation into “structural excess capacity and production in the manufacturing sectors,” covering the EU, China and 14 other countries, is also expected to end in the coming weeks and could also result in higher tariffs.

In anticipation of Friday’s deadline, the Commission will today brief EU ambassadors on the state of play, according to two people familiar with preparations.

“The transatlantic partnership remains a cornerstone of our economies,” said a Commission spokesperson: “Its continued strength will depend on both sides honouring their commitments . . . We have delivered, and we expect the same from the US.”

EU countries are in “wait and see” mode ahead of Friday, said one EU diplomat, but a potential retaliation package on over $100bn of US exports, including cars, bourbon and soyabeans, remains ready to be deployed should tariffs higher than 15 per cent be applied.

“The EU has had retaliatory measures ready to go if the situation materialises since the start of the second Trump administration,” said an EU official.

What to watch today

1. College of EU commissioners meets, agrees action plan for the European Pillar of Social Rights.

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• Food security: Europe’s June heatwave wiped more than €2bn from the value of its grain crop.

• Jan Marsalek: The chief executive of a leading British fintech offered to help the fugitive Austrian fraudster set up billion-dollar arms deals.