The war in Ukraine changed the way Europe buys, sells and trades oil. Before the war, Europe depended heavily on Russia for crude oil. When the war began, sanctions and political tensions forced Europe to find new suppliers and routes.
This shift revealed deep structural vulnerabilities in Europe’s oil commodity chains; it created new costs, risks and uncertainties. Oil traders, banks and shipping companies have all had to adapt to a more complex and unstable market.
As an Azerbaijani entrepreneur with practical oil industry experience, I have watched how these changes reshaped our country’s role in the energy market. Azerbaijan’s pipelines and ports, once part of a regional network, suddenly became crucial routes for Europe’s energy supply. It brought both opportunity and pressure, as every barrel now carried new political and economic weight.
In this blog, I want to share my thoughts on how the war in Ukraine and sanctions targeting Russia have disrupted Europe’s oil trade:
Before 2022, Europe’s oil market was stable, relying heavily on Russian crude and refined products delivered under long-term contracts. The war in Ukraine and EU sanctions – banning Russian oil imports by sea and introducing price caps – disrupted this stability. Now, Europe faces higher costs, longer shipping routes and a shortage of tankers. Banks and insurance companies are also doing much stricter checks. Many European refineries, which were built to process Russian Urals crude, cannot easily handle oil from other sources. As a result, deals that once took a few days can now take weeks or even months.
Even with sanctions in place, Russian oil still reaches world markets through what people call the ‘grey market.’ Oil is sometimes mixed, relabelled or shipped through other countries to hide its true origin (Reuters). Some tankers even change their flags or transfer oil from one ship to another at sea. This makes it difficult for European buyers to know exactly where their oil comes from, increasing the risk of unintentional sanctions breaches and complicating compliance efforts.
Sanctions have also made payments and insurance much harder. Western banks now demand extensive documentation and background checks before approving deals, which slows everything down. To keep business moving, many traders are turning to financial institutions and insurers in places like Dubai, Singapore and Hong Kong. These alternatives often come with higher costs and less protection.
Frequent changes and inconsistencies in sanctions add further challenges. The EU’s 18th sanctions package in 2025 modified price caps and banned certain products made from Russian oil, even if refined elsewhere, requiring traders to provide proof of origin for indirect exposure. Traders must navigate differing rules from the EU, UK, US and G7, which do not always align. Smaller and medium-sized traders face high compliance costs, sometimes forcing them out of the market entirely.
Together, these factors have made the market more expensive, complex and unpredictable.
Azerbaijan’s role in Europe’s supply
From Azerbaijan’s point of view, Europe’s search for new oil sources after reducing its dependence on Russia created a great opportunity. Azerbaijan is already well connected to Europe’s energy network through the Baku-Tbilisi-Ceyhan (BTC) pipeline, which carries Caspian crude oil to the Mediterranean. This system plays a major role in linking our oilfields to European markets and proves Azerbaijan’s importance as a reliable energy partner.
In 2025, however, even this strong route faced a temporary problem. Contamination in the crude stopped exports for several days at Turkey’s Ceyhan terminal, causing a 5.3% drop in Azerbaijan’s oil exports between January and August 2025. The issue was quickly fixed, and exports resumed soon after.
This incident showed that even trusted routes need strong infrastructure, maintenance and flexibility. Europe has done well to diversify its supplies, but it also needs to invest in safe, modern and strong energy connections.
For Azerbaijan, this period highlighted our growing role as a trusted and forward-looking energy partner for Europe, ready to support both traditional and green energy cooperation.
Finding the way forward
The war in Ukraine has transformed Europe’s oil market. The old trading routes and systems are gone, and new ones are still developing. The region is less dependent on Russia, but it now faces higher costs, tricky logistics and uncertainty. Sanctions have shifted trade and driven innovation, but they have also caused loopholes and confusion. Now every barrel carries not just oil, but paperwork, logistics and politics.
To move forward and stabilise commodity flows, Europe needs policies that match the realities of oil trade. Traders and governments need to work together to make the system clearer and more secure. I agree with industry experts on the way forward for Europe’s energy strategy:
These steps reflect both my view and what many experts recommend.
For countries like mine, Azerbaijan, this moment matters. By working closely with Europe, we can help keep energy supplies steady, build trust and contribute to a stronger, more independent European energy system.
