On 19 July 2025, the EU approved what is now its 18th sanctions package in response to Russia’s war of aggression against Ukraine. The new package aims to cut Russia’s energy revenues and weaken its defence industry by imposing heavy restrictions on Russia’s energy and banking sectors. The sanctions also affect the Nord Stream and 2 gas pipelines in the Baltic Sea. The package includes further measures against Russia’s shadow fleet and a reduction in the oil price cap, as well as additional export bans and controls aimed at combating sanction circumvention.
With its 18th sanctions package, the EU wants to increase pressure on Russia in response to failed diplomatic efforts to achieve a ceasefire and Russia stepping up its attacks on Ukraine.
This package picks up where the previous ones left off, building in particular on the 17th sanctions package, which also targeted Russia’s shadow fleet, financial institutions and persons connected to Russia’s military-industrial complex.
The new package incorporates the following acts:
- Amending Regulation 2025/1494 tightens the largely trade-related sanctions set out in Regulation (EU) 833/2014 concerning restrictive measures in view of Russia’s actions destabilising the situation in Ukraine.
- Implementing Regulation 2025/1476 adds further persons and entities to Annex I to Regulation (EU) 269/2014, which largely contains personal financial sanctions.
- Amending Regulation 2025/1472 expands Regulation (nordEU) 765/2006 concerning restrictive measures in view of the situation in Belarus and the involvement of Belarus, bringing the trade restrictions on Belarus in line with the previously more extensive ones imposed on Russia.
- Implementing Regulation 2025/1469 adds further entries to Annex I to Regulation (EU) 765/2006, which lists natural and legal persons.
The following changes to the sanctions regime are particularly noteworthy:
Transaction ban for the Nord Stream and 2 gas pipelines
The EU has introduced a new Article 5af in Regulation (EU) 833/2014 prohibiting any transaction connected to the Nord Stream and 2 pipelines. This will prevent the completion, maintenance, operation and any future use of the currently non-operational pipelines. Paragraphs 2 and 3 provide for exceptions and the potential authorisation of certain transactions, however. This is a new sanctions instrument – a transaction ban on assets instead of the usual persons or companies – that was first used in the 17th sanctions package, but not applied in practice because no assets were listed in the relevant annex (see our article on the 17th sanctions package).
Lowering the price cap for Russian crude oil
The price cap for Russian crude oil is being lowered from USD 60 to USD 47.60 per barrel to align it with current global prices. An automatic and dynamic adjustment mechanism aimed at ensuring that the cap remains effective and is regularly reviewed is also introduced in the new Article 3(11) of Regulation (EU) 833/2014. The new mechanism will set the price cap based on the average market price of Russian crude oil. The amended price cap will apply from 1 August 2025, and the new mechanism must be assessed by 15 April 2026.
Tougher sanctions against Russia’s shadow fleet
The EU’s 18th sanctions package extends the measures against the Russian shadow fleet along its entire supply chain. The fleet consists of hundreds of aging and often poorly maintained tankers that Russia uses to circumvent the oil price cap and export crude oil to destinations such as India. The new measures target the entire logistical and economic infrastructure behind these circumvention transactions.
To this end, the EU has added a further 105 vessels to Annex XLII of Regulation (EU) 833/2014 – mainly non-EU tankers circumventing the oil price cap mechanism or transporting military equipment or stolen Ukrainian grain – bringing the total number of shadow fleet vessels referred to in Article 3s to 444. Under Article 3s(1), these vessels are prohibited from entering EU ports and are subject to a comprehensive ban on maritime services.
Companies and natural persons associated with the shadow fleet are also subject to sanctions. This marks the first time that the EU has targeted Russian and international companies managing shadow fleet vessels or trading in Russian crude oil – including a major refinery in India majority-owned by Rosneft. It is also the first time that natural persons with links to the shadow fleet have been included in Annex I to Regulation (EU) 269/2014, among them the captain of a shadow fleet vessel and the operator of an international open flag registry alleged to have facilitated acts of circumvention. One entity in the Russian LNG sector has also been sanctioned – a further signal that the EU is now targeting alternative Russian energy export routes as well.
Expansion of import and export restrictions
As part of the 18th sanctions package, the EU has introduced – by way of a new Article 3ma in Regulation (EU) 833/2014 – a comprehensive import ban on refined petroleum products made from Russian crude oil and imported from third countries, with the exception of those listed in the newly created Annex LI, namely Canada, Norway, Switzerland, the United Kingdom and the US. Like the existing ban on iron and steel imports, the import ban on petroleum products requires importers to prove where the crude oil originates. The move is designed to prevent circumvention of the existing crude oil sanctions and make it even more difficult for Russian energy products to reach the EU market. The new import ban comes into force on 1 January 2026.
Full transaction ban and inclusion of further banks
With its latest sanctions package, the EU is again escalating its sanctions on the Russian financial sector. For example, the scope of application of the prohibition in Article 5h(1) Regulation (EU) 833/2014 now extends to all types of transactions. Whereas exclusion of Russian banks from the SWIFT system already made international payment transactions more difficult, the new set of measures aims to effectively block all dealings with the sanctioned institutions.
The amended Annex XIV extends the transaction ban to 22 additional Russian banks – on top of the 23 institutions already sanctioned. In a deliberate effort to close remaining loopholes, the EU has included banks that operate via alternative financial messaging services, such as SPFS, developed by the Central Bank of Russia. Under the new Article 5ag, the package also imposes a ban on all transactions with the Russian Direct Investment Fund (RDIF), its subsidiaries, and companies in which the RDIF has invested, further restricting Russian access to international financial and capital markets.
This also lowers the threshold for sanctions against non-EU credit or financial institutions or crypto-asset service providers that frustrate EU sanctions. Specifically, actors that circumvent EU sanctions, provide financial support to Russia or are connected to the SPFS can be listed. A transaction ban applies to non-EU companies listed in Annex XLV or L. So far, two Chinese financial institutions have been listed in Annex XLV; Annex L does not contain any entries yet.
Finally, a new export ban on certain software with applications in the banking and financial sector was introduced in Article 5n(2b). This specifically targets software management systems and financial software whose use could support the stability or functionality of the Russian financial system.
Action against Russia’s military-industrial complex
The Regulation makes 26 additional companies – eleven of which are based in third countries outside Russia (seven in China and Hong Kong, four in Turkey) – subject to stricter export restrictions on dual-use goods and other sensitive technologies due to their inclusion in Annex IV of Regulation (EU) 833/2014. Those companies were targeted because of their involvement in circumventing existing export controls, for example in connection with the supply of components for unmanned aerial vehicles (UAVs).
In addition, the EU has agreed on further export bans worth more than EUR 2.5 billion. Annex VII, which refers to the export ban in Article 2a, now also includes CNC (computerised numerical control) machines and chemical precursors for the production of propellants that can be used directly for the development and production of Russian weapons systems. The bans contained in Article 2a(1) and Article 2b(1) now apply to these.
Indirect deliveries – via Russia – of the goods listed in Annex VII are also to be strictly prohibited. For this purpose, the existing transit ban via Russian territory in Article 2a(1a) was expanded – by amending Part B of Annex VII – to cover eight additional economically critical goods, in particular those relevant for the construction and transport sectors. In addition, Article 2a(1aa) introduces a new ban on the export of goods listed in Annex VII to any third country other than Russia, provided that the exporter has been informed by the competent authority of the Member State that goods may be intended for use in Russia. It remains to be seen to what extent the Member States will make use of this option, which could potentially also restrict trade with third countries other than Russia.
Protective measures against illegitimate arbitration proceedings
Another change is the introduction of protective measures in connection with investor-state dispute settlement (ISDS) – including in a new Article 11e, which provides Member States with the possibility to recover damages they have incurred as a result of such proceedings.
Belarus
The EU’s 18th sanctions package also extends the measures against Belarus. In particular, the package now aligns the trade restrictions imposed on Belarus with the far-reaching sanctions against Russia.
Outlook
The 18th sanctions package marks a further ramping up of the EU’s economic and political pressure on Russia. The measures are aimed at further weakening Russia’s economic base and forcing it to the negotiating table. In particular, the package includes far-reaching measures against the energy and banking sectors, as well as targeted sanctions against Russia’s defence industry.
Beyond the highly symbolic sanctioning of the Nord Stream pipelines, the package sends a strong signal by lowering the oil price cap, extending transaction bans and expanding export and import restrictions.
While many measures build on existing sanctions, the package represents another step in the EU’s consistent strategy to permanently cut Russia off from key international markets and technologies. Not limited to Russia, the 18th sanctions package once again targets companies in non-EU countries found enabling the circumvention of EU sanctions. China has strongly condemned the sanctions on its companies and threatened countersanctions.
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