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EU’s energy disaster: Russian diesel ban forcing huge price rise – Industry Boss Warns

Jyotirmay Kaushal by Jyotirmay Kaushal
July 25, 2025
in Geopolitics
EU’s energy disaster: Russian diesel ban forcing huge price rise – Industry Boss Warns

10/05/2025. Rzeszow, Poland. Prime Minister Keir Starmer, Emmanuel Macron, French President, and Friedrich Merz, German Chancellor and Poland Prime Minister Donald Tusk meets for a bilateral before travelling to Ukraine to meet Volodymyr Zelenskyy, President of Ukraine. Picture by Simon Dawson / No 10 Downing Street

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The European Union’s sweeping ban on Russian diesel imports is making fuel prices soar higher and may cause lasting disruptions to supply chains, according to Patrick Pouyanné, CEO of French energy giant TotalEnergies.

Speaking at an energy conference in Paris, Pouyanné warned that the EU’s decision to halt all diesel imports linked to Russia — including via third-party traders — has cut off vital supply routes and added strain to an already tight global diesel market.

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“When you remove such a significant player from the supply equation, prices inevitably react,” he said. “The European market is now facing structural shortages, and the cost of replacing Russian diesel with alternatives is substantial.”

Impact on EU

Since early 2023, the EU has gradually phased in bans on Russian refined petroleum products as part of its sanctions in response to the Ukraine conflict. The latest measures, expanded in mid-2025, close loopholes that allowed Russian diesel to enter EU markets via countries like Turkey, India, and the UAE — where it was re-exported after being refined or blended.

Industry insiders say this has led to logistical bottlenecks and intensified competition for diesel cargoes from the Middle East, Asia, and the US.

The rising cost of diesel is already feeding into broader inflation concerns across the bloc. In countries like Germany, France, and Italy — all heavily reliant on diesel for transport and manufacturing — businesses are reporting increased operational costs, which are being passed on to consumers.

Agricultural groups have also raised alarms. Diesel is essential for tractors, harvesters, and food transport, meaning food prices may climb further in the coming months.

Economists warn that these pressures could stall the EU’s fragile post-pandemic recovery. The European Central Bank (ECB) has flagged fuel inflation as a key risk heading into the final quarter of 2025.

“Europe’s decision to cut ties with Russian diesel is morally and politically consistent with its stance on Ukraine,” said Clara van Rheede, an energy analyst at ABN AMRO. “But there’s no denying it comes with economic pain — especially for lower-income member states more reliant on diesel imports.”

Higher Prices Could Be the New Normal

Diesel is vital to Europe’s transport, agriculture, and industrial sectors. With Russia previously accounting for over 40% of the EU’s diesel imports, replacing that volume entirely has proven costly and complex.

“We are now paying more for fuel, not only due to the sanctions, but also because of the cost of building new trade routes and securing stable supply,” said Pouyanné.

Market analysts echo the warning, noting that diesel prices have surged over 20% since the expanded ban took effect. They caution that unless European refining capacity ramps up significantly — or demand softens — elevated prices could persist through the winter and beyond.

Meanwhile in response to the expanded EU sanctions, Moscow has aggressively pivoted its diesel exports toward Asia, Africa, and Latin America — often at discounted prices to secure new buyers.

The Kremlin has also threatened retaliatory measures, including restricting exports of other refined fuels and crude components to Western-aligned countries.

“The West wants to cut us out? Fine — we’ll sell to those who value reliable energy,” said Russian Deputy Prime Minister Alexander Novak earlier this month. “Europe will pay more. That’s the consequence of geopolitics over pragmatism.”

Russia’s redirection strategy appears to be gaining traction. Analysts from Vortexa and Kpler report a sharp uptick in Russian diesel shipments to Brazil, Morocco, and Singapore in Q2 2025.

The diesel standoff is a stark example of how geopolitics is reshaping global energy flows. As Europe distances itself from Russian hydrocarbons, it must grapple with new dependencies, logistical hurdles, and higher costs — a reality that may persist for years.

“This isn’t just a temporary spike — we are witnessing the emergence of a new trade map for refined fuels,” said Pouyanné. “And in the short term, it’s Europe that pays the price.”

 

Tags: EU
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Jyotirmay Kaushal

Jyotirmay Kaushal

Dreaming of a reality that is a dream. A scribbler in the current incarnation with an avid interest in global affairs.

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