Overview of the EU's 18th sanction package

What you need to know

• The EU intensifies pressure on Russia’s energy and financial sectors.
• The measures lower the Russian crude oil price cap to $47.60, ban imports of third-country petroleum products made from Russian crude and prohibit transactions related to Nord Stream 1 and 2.
• The EU imposed a full transaction ban on the Russian Direct Investment Fund and its affiliates, 22 additional Russian banks, and, for the first time, two Chinese financial institutions.
• The EU has added 55 individuals and entities – including Rosneft’s largest refinery in India – to asset freeze provisions.
• The EU continues to enhance its anti-circumvention toolkit through the introduction of new catch-all export controls for advanced technology items.

On 18 July 2025, the EU adopted its 18th package of sanctions against Russia, with the corresponding legal acts published in the Official Journal of the EU on 19 July 2025. This new package introduces both economic and individual restrictive measures, targeting Russia’s energy, banking, and military sectors, as well as its trade relations with the EU. A central element of the package is the lowering the existing price cap on Russian crude oil from $60 to $47.60 per barrel, an action taken in concert with the UK but not (at least for now) the US and other G7.

Certain measures of the 18th package are also mirrored in the updated sanctions regime against Belarus. In this briefing, our Sanctions and Export Control team has summarised the key developments.

Price cap amendments and introduction of a dynamic price cap mechanism

The new sanctions package lowers the Russian crude oil price cap from $60 to $47.60 per barrel, effective 3 September 2025. EU persons have until 18 October 2025 to wind down contracts concluded before 20 July 2025 that complied with the $60 price cap.

Moving forward, the European Commission will monitor Russian crude oil prices and adjust the cap dynamically to maintain it at 15% below the average market price for Russian crude oil. Revisions to the cap will occur on 15 January 2026 and every six months thereafter. However, the European Commission will not make any change if the newly calculated price differs from the existing cap by 5% or less.

Any revised cap will take effect on the first day of the month following the entry into force of the corresponding European Commission implementing regulation. Each time the price cap is amended, prior contracts that are compliant with the existing price cap should benefit from a transition period of 90 days for maritime transport and for the provision of technical assistance, brokering services or financing or financial assistance related to the maritime transport of Russian crude oil to third countries.

The price caps applicable to Russian petroleum products – whether trading at a premium or discount to crude oil – remain unchanged at $100 and $45 per barrel, respectively.

Asset freezing sanctions

The new sanctions package imposes asset freeze measures on 14 individuals and 41 entities, with a focus on Russia’s military-industrial complex and its extended supply chains – including those supporting the operation of Russia’s "shadow fleet." Targets include Chinese companies determined by the EU to have supplied battlefield-related goods to Russia, Rosneft’s largest refinery in India, and both Russian and foreign firms determined to have been involved in managing or servicing Russia's shadow fleet vessels, or acting as their customers.

Trade restrictions

Import ban

Effective 21 January 2026, EU persons will be prohibited from purchasing, importing or transferring into the EU petroleum products if they are produced in third countries using Russian-origin crude. EU persons will be barred from providing any related technical assistance, brokering, financing, insurance, or reinsurance.

The prohibition will not apply to any petroleum products made in Canada, Norway, Switzerland, the UK, and the US. Moreover, the legislation presumes that petroleum products imported from third countries that were net exporters of crude oil in the previous calendar year have obtained from domestic crude oil and not from crude oil originating in Russia.

Export restrictions

The EU has expanded existing export restrictions with respect to goods and technology contributing to Russia’s military and technological enhancement as well as Russian industrial capacities. Newly listed items include certain chemicals and industrial inputs such as hydrogen and rare gases as well as metals and metal products.

Transaction bans in the finance and energy sectors

Banking and finance

The EU implemented a full transaction ban on 22 additional Russian banks. Furthermore, for the first time, the EU has also imposed transaction bans on two Chinese financial institutions – Heihe Rural Commercial Bank Co. Ltd. and Heilongjiang Suifenhe Rural Commercial Bank Co. Ltd – determined by the EU to be "significantly frustrating the purpose of the" EU-Russia sanctions.

Similarly, the EU has also introduced a transaction ban against the Russian Direct Investment Fund (RDIF), any entities owned or controlled by RDIF, any listed non-EU entities that are RDIF's "significant investments" and any listed non-EU entities providing any of the foregoing with investment services or other financial services.

The European Commission clarified that an investment is to be considered ‘significant’ if it appears to be underpinned by a governmental economic policy or strategy or if it concerns a sector that is relevant for Russia’s long-term geopolitical manoeuvrability, in particular finance and banking, transport, telecommunications, defence, industrial manufacturing, advanced technology, energy, or the prospection, exploration and production of oil, gas and mineral resources, including related intellectual property or research and development.

Additionally, the ban on specialised financial messaging services has been expanded into a full transaction ban, with further banks added to the list. Also, the package introduced new conditions for imposing a transaction ban on persons, entities or bodies established outside Russia that use the System for Transfer of Financial Messages (SPFS) of the Central Bank of Russia or equivalent specialised financial messaging services set up by the Central Bank of Russia.

Nord Stream 1 and 2 pipelines

Similarly to the transaction bans discussed above, the new package introduces a ban on transactions related to the Nord Stream 1 and 2 pipelines. Despite being non-operational since 2022, the pipelines have continued to involve some commercial activity. The new measures prohibit transactions relating to the completion, operation, maintenance or use of the pipelines; and the financing concerning the completion, operation or use of the pipelines with narrow exemptions relating to environmental or maritime safety. Derogations are allowed with respect to transactions strictly necessary for unwinding existing transactions.

Anti-circumvention measures

New entity listings

The EU has added a further 26 entities to the list of entities subject to stricter export controls relating to listed dual-use and advanced technology items. This includes 15 Russian-based entities and 11 from third countries: four in Türkiye and seven in China/Hong Kong.

Expanded transit ban

The transit ban has been broadened to cover eight additional commodity codes from the EU’s Economically Critical Goods list (last updated on 24 February 2025). These items, used in construction and transport – including two directly relevant to the energy sector – may no longer transit through Russia when exported from the EU to third countries.

New "catch-all" export controls for advanced technology items

A new provision permits a competent authority to require an exporter of advanced technology items to apply for a licence where the competent authority has concerns that the items may be intended for Russia.

This measure does not impose a new blanket restriction and does not modify the existing prohibition on any indirect exports of advanced technology items to Russia. However, it provides EU Member States with an optional administrative mechanism that enables national competent authorities to require prior authorisation to block, investigate, and prevent suspicious shipments that could be used to circumvent sanctions.

Sanctions on Russia's "shadow fleet"

An additional 105 vessel have been listed, meaning that a total of 444 vessels in Russia's shadow fleet are now listed by the EU. Three LNG tankers have been delisted, North Moon, North Ocean, North Light, following firm commitments that these vessels will no longer engage in the transport of Russian energy to the Russian Yamal and Arctic 2 projects. The listed vessels are subject to restrictions on a broad range of services related to maritime transport.

Measures to protect member states from arbitration

New protective measures have been introduced to address risks from investor-state dispute settlement cases initiated by listed individuals or entities in response to EU sanctions. These measures aim to shield Member States from potential economic harm under bilateral investment treaties and include provisions to enable recovery of any damages resulting from such claims.

How to prepare and what's next?

Given the extensive scope of the new measures, companies should review their sanctions risk assessments and compliance policies and controls. Businesses in higher risk sectors, such as energy and financial services, or with ties to Russia or diversion jurisdictions should adjust operations as necessary. The European Commission indicated that further legal clarifications and guidance will be published within the coming months. Our Sanctions and Export Control team stands ready to assist our clients with any upcoming matters related to these new EU sanctions.