The 18th EU sanctions package against Russia

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Overview and implications

Russia’s invasion of Ukraine in February 2022 marked the beginning of unprecedented Western sanctions. Since then, the European Union has quickly put together 18 packages of sanctions. Each package contains new economic penalties designed to persuade the Kremlin to change course. Initially, the focus was on targeted sanctions: asset freezes and travel bans were imposed against hundreds of Russian officials, oligarchs and military personnel, as well as initial financial sanctions, shortly after the war began. These were followed by comprehensive export controls, particularly on dual-use goods, semiconductors, high-tech and military equipment, as well as import bans on Russian products including coal, steel and later, gold and certain luxury goods.

Since December 2022, an EU import ban on Russian crude oil by ship has been in force, followed by an import ban on refined oil products from February 2023. In addition, the G7 countries and the EU agreed on the world’s first price cap for oil.

At the same time, the EU increasingly intervened in the financial sector: gradually, almost all major Russian banks were disconnected from SWIFT and had their assets frozen. Transactions with the Russian central bank were also restricted, and some of its foreign reserves were frozen. In the energy sector, the EU also imposed a coal embargo (August 2022) and is working – controversially so far – on phasing out natural gas by 2027/28. For some member states with high gas dependency (e.g. Slovakia, Hungary, Germany), the latter is a considerable challenge and explains current political conflicts in the sanctions process.

As the war continued, further import bans were imposed, e.g. on Russian wood, cement, metals and technologies. There was also an increased focus on circumventing sanctions. Starting with the 10th and especially the 11th package of sanctions, the EU began introducing mechanisms to target third-country companies helping Russia circumvent sanctions. For example, companies from Iran, Turkey, China, Armenia, Uzbekistan and other countries were blacklisted if they re-exported Western goods or helped Russia procure sanctioned technology.

The 17th package was specifically aimed at further weakening Russia’s war machine and closing loopholes. It expanded the lists of prohibited items to include certain chemicals, e.g. for rocket propellants and machine parts such as precision bearings for machine tools.

In addition, the EU added 189 more ships from Russia’s ‘Shadow Fleet’ to the sanctions list and adjusted the legal framework to better target front men and complex ownership structures of sanctioned oligarchs. The listing of foreign intermediaries, especially companies in countries such as Turkey, the UAE and China, was also stepped up.

The main new feature of the 18th package of sanctions is the variable dynamic oil price cap.

Impact on companies & consulting requirements

For European companies, the new package means significant compliance requirements. Companies should immediately check whether they have any business relationships with newly sanctioned banks, ships or companies and terminate or reassess these relationships. In trade, supply chains must be monitored to ensure that raw materials or components sourced via third countries are not of Russian origin. Exporters are responsible for observing the expanded lists of goods and adapting their customs and export control processes. 

Financial institutions must ensure that no direct or indirect transactions take place with Russian financial actors that are now subject to comprehensive sanctions.

Companies need legal support in implementing the sanctions, setting up effective compliance programmes, conducting due diligence on business partners and answering questions about exemptions or authorisations. This presents an opportunity to proactively assist clients in assessing and mitigating risks and to guide them safely through the complex sanctions regime.

Background & Objective

With the 18th package of sanctions (July 2025), the EU is once again tightening measures against Russia to further weaken its ability to finance the war. The focus is on Russia’s oil revenues and financial flows to maximise pressure on Moscow in the face of the war in Ukraine.

Dynamic oil price cap

In future, the price at which Russian oil may be sold internationally (with the participation of Western companies) is to be adjusted on an ongoing basis. The agreement stipulates that this price cap should always be 15% below the average market price for crude oil. In practical terms, at current prices, this means a jump from 60 USD to around 47.60 USD per barrel as the new upper limit. The mark will be reviewed every two months and automatically adjusted every six months to keep pace with market developments. If the oil price fluctuates significantly, unscheduled adjustments are also possible.

Implementation in practice is likely to be challenging. It will require careful tracking of supply chains and proof of origin for oil products. Importers in the EU will be responsible for ensuring that, for example, a shipment of diesel from Singapore or another hub has not been produced from Russian crude oil. Certification requirements or certificates of origin may be necessary.

The EU lists over 100 additional tankers in Russia’s ‘shadow fleet’ – old ships used to circumvent oil sanctions – and prohibits them from accessing EU ports or services. In future, there will be an import ban on fuels and other products refined from Russian crude oil in third countries (such as India and Turkey). This will prevent indirect oil exports from Russia via third countries.

Nord Stream and energy projects: Transactions related to the Nord Stream 1 and 2 Baltic Sea pipelines will be banned. No company will be allowed to provide goods, services or investments for the possible recommissioning of these gas pipelines. The EU is thus drawing a line under possible future gas supplies via Nord Stream and denying Russia the resulting revenues.

With its 18th package of sanctions, the EU is specifically tightening its stance against the ‘shadow fleet’ – a network of over 400 mostly older oil tankers used to circumvent Western sanctions. By listing these vessels, banning them from ports and withdrawing insurance and classification services, Russia’s ability to export oil outside regulated trade channels will be significantly curtailed.

Extended financial sanctions

All transactions with Russian financial institutions are prohibited. Specifically, the EU is excluding 22 additional Russian banks from the SWIFT system and imposing a complete ban on transactions with these banks. Russia’s sovereign wealth fund (Russian Direct Investment Fund, RDIF) and its investments are also being sanctioned. This is intended to further isolate Russia’s financial sector and prevent it from accessing international capital.

The EU is expanding its export restrictions – additional chemical substances, plastics and machine components are being added to the sanctions list and may no longer be supplied to Russia. To combat sanctions evasion, 26 new companies and organisations have been added to the list, including several companies from China, Hong Kong and Turkey. For the first time, two Chinese banks have also been targeted. EU citizens and companies are prohibited from doing business with them as they are suspected of circumventing Russia’s sanctions, and more asset freezes have been imposed.

Political resistance & agreement

The adoption of the package was delayed for weeks by a veto from Slovakia. Prime Minister Robert Fico blocked the sanctions to force concessions on a separate EU project – a complete ban on Russian gas imports by 2028. Only after the EU gave guarantees to Slovakia (such as financial security and flexible adjustment of the oil price cap instead of a rigid reduction) and other members exerted pressure did Fico back down. Malta, Greece and Cyprus also expressed concerns that a drastic oil price cap could impact their shipping industries. However, with the compromise of a dynamic price cap, all member states ultimately agreed to the package unanimously.

Impact on companies & consulting requirements

For European companies, the new package means significant compliance requirements. Companies should immediately check whether they have any business relationships with newly sanctioned banks, ships or companies and terminate or evaluate these relationships. In trade, supply chains must be monitored to ensure that raw materials or components, such as those sourced via third countries, are not of Russian origin. Exporters are responsible for observing the expanded lists of goods and adapting their customs and export control processes.

Financial institutions must ensure that no direct or indirect transactions take place with Russian financial actors that are now subject to comprehensive sanctions.

Companies need legal support in implementing the sanctions, setting up effective compliance programmes, conducting due diligence on business partners and answering questions about exemptions or authorisations. This is an opportunity to proactively assist clients in assessing and mitigating risks and guide them safely through the complex sanctions regime.

A 19th EU sanctions package against Russia is already in the pipeline. It could include new measures in the areas of nuclear energy, banking, raw materials, transport and circumvention of sanctions – but is becoming increasingly difficult to implement politically. This increases the pressure on companies to comply, which opens up considerable opportunities for advice in foreign trade law.