“The message is clear: Europe will not back down in its support for Ukraine. The EU will keep raising the pressure until Russia ends its war.”

Kaja Kallas, High Representative for Foreign Affairs and Security Policy and chair of the Foreign Affairs Council

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These measures were adopted through:

• 2 Common Foreign and Security Policy (“CFSP”) Decisions;
• 1 Council regulation; and
• 1 Council implementing regulation.

The sanctions against Belarus were adopted through 2 CFSP Decisions, 1 Council regulation and 1 Council implementing regulation.

This Insight discusses the sanctions adopted against Russia.

Takeaways

• The 18th is a consequential addition to the EU’s sanctions policy vis-à-vis Russia. It expands the scope of existing measures, creates new sanctions and tools (including an EU-specific price cap mechanism), delegates new powers to the European Commission (the “Commission”), entrusts Member States with new discretionary controls over high-risk export transactions with third-countries, while protecting the EU and its Member States from investment-treaty claims and the abuse of dispute resolution mechanisms in third countries arising out of EU sanctions, thus confirming the fundamental public policy at hand.
• Meanwhile, by stressing the importance of “indirect prohibitions”, taking additional actions against diversion and circumvention risk and targeting entities in third countries through all forms of sanctions, from asset freeze designations to transaction bans and heightened entity-based export controls, the 18th package further heightens compliance expectations for companies subject to EU jurisdiction operating globally. These new third-country actions take particular importance by effect of the best efforts obligations and continue to underline the importance of performing effective EU sanctions due diligence.
• The new listings mainly aim at disrupting Russian energy revenues and military capacity and hit those responsible for the indoctrination of Ukrainian children, Russian propaganda, and manipulation of Ukrainian cultural heritage.
• Aligned with the EU’s clear objective to curtail Russia’s energy revenues, the EU lowered the price cap for crude oil from USD 60 to USD 47.6 per barrel and streamlined the price cap modification process through the introduction of an automatic and dynamic mechanism handled by the Commission. The EU also introduced a new import ban on refined petroleum products made from Russian crude oil and coming from any third country.
• Full-fledged sanctions including asset-freeze measures, travel bans and trade sanctions have been adopted to impose further sanctions against the shadow fleet, its value chain and the companies managing this fleet.
• For the first time in a sanctions program, the Council adopted a “catch-all provision” in order to address sanctions circumvention via third countries of exports of advanced technology items. Consequently, Member States can require a prior authorisation to be granted if controlled items are or may be intended, for an entity in Russia or for use in Russia. As stated in recital 7 to Council Regulation 2025/1494, the Council issues a strong reminder about the indirect prohibitions under Regulation 833/2014.
• Aware that Russian banks support Russia’s war machine and help circumvent EU sanctions, particularly through cross-border transactions, the EU has targeted several of them through various measures, including expanding the ban on transactions to cover a larger number of Russian and foreign financial institutions. The EU also broadened the scope of the restricted services under Article 5n to Regulation 833/2014 to include software with certain uses in the banking and financial sector.    
• Finally, the EU adopted new measures to protect its Member States from abusive use of bilateral investment treaties (“BIT”) by Russian parties and strengthened the no-claims clauses.  

1. Individual Restrictive Measures

New Designations

• Russia’s war efforts – The Council added 55 additional listings, including 14 individuals and 41 entities, to its restricted parties list through Council Regulation 2025/1476.
  
  • Several asset-freeze measures aim at directly or indirectly fighting against the shadow fleet including by adding, for the first time, a captain of a shadow fleet vessel as well as the UAE company operating the Gabon and, indirectly, the Comoros international flag registry which has been flagging vessels transporting Russian crude oil or petroleum products in violation of EU sanctions.
  • Several designated parties are located in China and India, including Nayara Energy Limited which is operating an important refinery in Vadinar, India, 49% owned by Rosneft. This Indian company was hence listed for providing substantial revenue to Russia.  
  • In total, as of 19 July 2025, 1,958 individuals and 641 entities were designated under the Regulation 269/2014. The newly listed individuals and entities are subject to asset-freezes and restricted access to funds. Natural persons are additionally subject to a travel ban, which prevents them from entering into or transiting through the territories of EU member states.

2. Sectoral Sanctions

Energy Sanctions

• Price cap –
  
  • Lower price cap – The cap has been lowered by the EU from 60 to 47.6 USD as detailed in Annex XXVIII to Regulation 833/2014. The new EU price cap will apply on 3 September 2025.
  • New automatic Commission procedure to amend the Price cap – The Council adopted a new dynamic automatic mechanism to modify the price cap for Russian crude oil based on its average market price.
    
    • A new Commission power – Exceptionally, this procedure is managed by the Commission (instead of the Council), which monitors Russian crude oil prices and calculates the average market price over a defined six-month reference period. The Commission reports its findings to the Council and proposes amendments as appropriate. This ensures that the cap level remains consistently 15% below the average market price for Urals crude in the preceding reference period.  
    • Entry into force – The amended price cap shall apply as of the first day of the month following the month of entry into force of the Commission Implementing Regulation.
    • Transition period – A 90-day transition period applies to existing contracts in compliance with the cap already concluded at the time of the entry into force of the amending Regulation. This transition period will ensure consistent implementation of the price cap by all operators.
• New import prohibition of third-country refined petroleum products made from Russian crude oil – To prevent Russian crude oil from entering the EU market indirectly through the back door, the Council adopted a new import ban on refined petroleum products (under CN code 2710) produced from Russian crude oil and originating from any third country, with the exception of Canada, Norway, Switzerland, the United Kingdom, and the United States, as listed in Annex LI. This ban also covers the provision of related technical and financial services.
  
  • Importers have to provide evidence of the country of origin. The Commission already specified, in its Q&A, that guidance on the implementation of this prohibition will be issued.
  • Petroleum products imported from a “net exporter of crude oil” meaning a country that “exports more crude oil than it imports” in the previous calendar year, will be considered to have been obtained from domestic crude oil and not from crude oil originating in Russia.  
  • The list of countries of Annex LI shall not be confused with the one from Annex VIII to Regulation 833/2014 which is wider, as it includes Japan, South Korea, Australia, New Zealand, Liechtenstein, and Iceland.  
• New designations of vessels contributing to Russia’s energy revenues (Annex XLII to Regulation 833/2014) –
  
  • Listing – 105 new vessels, attempting to evade the oil price cap, and engaging in other unsafe shipping practices, were added to Annex XLII, and are now banned from Member States’ ports and locks, as well as from receiving a broad range of services related to maritime transport.
  • Delisting – 3 vessels have been delisted by the Council.
• New transaction ban targeting Nord Stream and Nord Stream 2 – The 18th package introduced a new prohibition to engage, directly or indirectly, in any transaction connected to the natural gas pipelines Nord Stream and Nord Stream 2 and that concerns the completion, operation, maintenance or use of the pipelines or parts of the pipelines. The transaction ban also covers the purchase of natural gas transported via these pipelines.
  
  • Exemptions and derogations have been adopted as well to ensure that existing control mechanisms over the pipelines via restructuring mechanisms, in particular in connection with Nord Stream AG and Nord Stream 2 AG, remain in place. These are to ensure that the pipelines will not be used.
• New derogation to import Russian LNG through Union LNG terminals – The Council added a new derogation allowing such imports for a Member State which is (i) not directly connected to the interconnected natural gas system of any other Member State, and (ii) receives the first commercial supply of its first long-term natural gas supply contract after 20 July 2025 in order to ensure its energy supply.  
• End of the Czechia derogation – In line with the EU’s objective to secure alternative supplies to Russian crude oil imported by pipeline, the temporary derogation granted to Czechia has now expired.
• Paks II project – The Council underlined in recital 27 that the Hungarian Nuclear Power Plant benefits from a large exemption under Article 12h to Regulation 833/2014, including the new transaction ban (previously limited to a SWIFT ban) laid down in Article 5h of Regulation 833/2014.

Export/Import-Related Restrictions

• Dual-use (Annex I to Regulation 2021/821) and advanced technology items (Annex VII to Regulation 833/2014)
  
  • Addition of new items – The prohibition on the export of advanced goods and technology listed in Annex VII to Regulation 833/2014 has been further strengthened to cover (i) Constituent chemicals for propellants (X.C.VIII.005), (ii) Machine tools for working any material by removal of material, operated by electro-discharge processes (HS 845630), and (iii) Water-jet cutting machines (HS 845650).
  • Strengthening of the restrictions targeting entities subject to enhanced restrictions in relation to dual-use and advanced technology items (Annex IV to Regulation 833/2014)
    
    • New designations – The Council added 26 new entities to the list of natural or legal persons, entities and bodies set out in Annex IV.
      
      • Among the listed entities, 4 are registered in China, 4 in Turkey and 3 in Hong-Kong. These third countries are considered to indirectly contribute to Russia’s military and technological enhancement through the circumvention of export restrictions, including on unmanned aerial vehicles (UAVs) or missiles.
  • New catch-all provision for advanced technology items (Annex VII to Regulation 833/2014) – The Council introduced a provision allowing national competent authorities (“NCAs”) to require exporters of such controlled items to any third country (other than Russia) to apply for an authorisation if the items are, or may be, intended for an entity in Russia or for use in Russia.
    
    • This provision serves as a new anti-diversion tool for customs and export control authorities, allowing them to stop and investigate suspicious shipments, as underlined in the Commission’s Q&A.
    • This is the first time such a mechanism has been included in a sanctions program. It is specified, however, that it should follow the rules and procedures laid down in Article 4 of Regulation (EU) 2021/821 (the “Dual-Use Regulation”).
  • Additional export and transit ban on industrial goods (Annexes XXIII, XXIIIE and XXIIIF) –
    
    • Annex XXIII (export ban) – The Council amended the existing list of industrial goods subject to an export ban (See complete list below).
    • Annexes XXIIIE and XXIIIF (export ban) – The Council added additional export restrictions on additional industrial goods (Annexes XXIIIE and XXIIIF), such as machinery, chemicals, some metals and plastics including Naphthalene, prepared driers, chain and parts thereof, of iron or steel or aluminium products.
      
      • New exemptions – Two different wind-down periods have been added for these new controlled items: for certain contracts until 21 October 2025 for items listed in Annex XXIIIE and 21 January 2026 for items listed in Annex XXIIIF.
      • Extended derogation – NCAs may now authorise the export of:
        
        • (i) Goods falling under CN code 7615 10, CN code 8414 60 and CN code 8422 30; and (ii) goods falling under CN code 3916 20 when strictly necessary for the sale of PVC flooring.
        • Goods falling under CN code 8422 30, provided that they are necessary for the packaging of food, beverages and pharmaceuticals.
        • Goods falling under CN code 3402 90 provided that they are necessary for the execution of contracts concluded before 1 January 2025 until 1 January 2028 or until their expiry date, whichever is earlier.
    • Annex XXXVII (export ban) – The list of items subject to the prohibition on transit via the territory of Russia has been extended to include the following 8 new entries:

• Amendment of Common Military List ban – The arms embargo contained in the Council decision has been replicated in the Regulation 833/2014, in line with the judgement of the Court Case C-351/22 issued on 10 September 2024.

State-owned transaction ban

• Strengthening of Article 5aa application – The Council added a new exemption from the transaction ban for EU entities acting on behalf or at the direction of an entity targeted by Article 5aa, provided that (i) a competent authority has imposed a public trusteeship or similar public firewall measure or (ii) the competent authority has authorised a similar firewall measure, on such entity.
  
  • The Council insisted, in recital 12 to Council Regulation 2025/1494, that the scope of the transaction ban set out in Article 5aa(1) should be broadly interpreted and should encompass all kinds of transactions, noting that “the transaction ban should to a large extent result, in practice, in the de-coupling of the subsidiary from its Russian parent company”.
  • In the same recital, the Council provided guidance on how to determine if a subsidiary of an entity targeted under Article 5aa is acting on behalf of the latter, extending therefore the transaction ban to the subsidiary. The appointment or dismissal of any authorised representatives of the subsidiary, or the receipt of instructions from, or approvals by, an intermediary entity not engaged in operational business activities are expressly listed as red flags demonstrating that the subsidiary acts on behalf of or at the direction of its Russian mother entity.      

Financial Sector

• New transaction ban against the RDIF – The Council adopted a new transaction ban against (i) the Russian Direct Investment Fund (“RDIF”), (ii) its subsidiaries or entities acting on its behalf or at its direction, and (iii) entities, established outside of the EU, that have made “significant investments” (listed in Annex XLIX) or providing investment services or other financial services (listed in Annex L). The RDIF is an instrument used by Russia to channel foreign currencies into its jurisdiction, to seek access to funds in order to sustain its war effort and to increase the resilience of its economy.    
  
  • Definition of “significant investment” – In recital 19 to Regulation 2025/1494, the Council specified that an investment is to be considered as “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.”
  • First designations (Annex XLIX) – The Council added 4 Russian entities (VizorLabs LLC, Kama (Atom) JSC, BitRiver LLC, and LABADVANCE LLC) to the list of legal persons, entities and bodies, in which RDIF has made significant investments, that are subject to the transaction ban.
• Extension of the transaction ban (Annex XLV) –
  
  • First designations – 2 Chinese financial institutions (Heihe Rural Commercial Bank Co. Ltd. and Heilongjiang Suifenhe Rural Commercial Bank Co. Ltd.) have been added to Annex XLV.
  • Enlargement of listing criteria – The Council expanded the transaction ban on third-country credit and financial institutions and crypto assets services providers to include:
    
    • entities that are significantly frustrating the purpose of the prohibitions in Regulation 833/2014 and Regulation 269/2014;
    • third-country financial institutions and crypto assets services providers that support Russia’s war of aggression against Ukraine including by processing transactions or providing export financing for trade operations that frustrate the purposes of Regulation (EU) No 833/2014; and
    • any third-country legal person, entity or body that is not a credit or financial institution or an entity providing crypto assets services, including oil traders, that is significantly frustrating the purpose of the prohibitions set out in Articles 3m, 3n and 3s of Regulation (EU) No 833/2014.
• Transaction ban against non-Russian banks using SPFS – The Council broadened the 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. Now the Council can list non-Russian, non-EU banks simply connected to SPFS, as well as those in third countries that are frustrating any of the EU sanctions on Russia or those who support Russia’s war of aggression.
  
  • In recital 13 to Regulation 2025/1494, the Council stated that, by expanding the use of SPFS outside its territory, Russia seeks to further pursue that strategy and to protect its international trade from the impact of Union restrictive measures
• Transformation from SWIFT exclusion to full transaction ban – The SWIFT exclusion rule has been amended to become a full transaction ban against the financial institutions listed in Annex XIV.
  
  • New designations – 22 credit or financial institutions have been added to Annex XIV.
  • New exemption and derogation – New exemptions and derogations have been added including:  
    
    • A new exemption has been adopted for diplomatic and consular representations; and
    • A new derogation has been adopted for transaction which are strictly necessary for divestment from Russia or for the wind-down of business activities in Russia.    

Restricted Services

• Software with certain uses in the banking and financial sector – As the Russian banking and financial sector is considered key to Russia’s war effort, the Council added software with certain uses in this sector, such as online and mobile banking, loan management, automated teller machines (ATM) and point of sale (POS) integration, regulatory reporting, and investment banking, to the Article 5n restriction.
  
  • New exemption – A wind-down period until 30 September 2025 for contracts signed before 20 July 2025 has been adopted.

Transport Sector

• Ports and locks transaction ban new exemption – A new exemption has been added to the transaction ban for ports and locks listed in Part A of Annex XLVII, allowing the import of coal loaded in, departing from, or transiting through Russia, provided that (i) it originates from a third country, and (ii) the owner of the goods is non-Russian.
• Airports transaction ban new exemption – A new exemption has been added to the transaction ban with airports listed in Part B of Annex XLVII for the listed operations required for the completion of civil nuclear facilities.

3. Litigation & Arbitration

• New procedural safeguards against illegitimate BIT arbitration and abuse of dispute resolution mechanism by Russian parties or interest in third countries – With the 18th package, Member States now have the right not to recognise or enforce any injunction, order, relief, judgment of a foreign court pursuant to or derived from investor-State dispute settlement proceedings (i) in connection with measures imposed under Regulation 833/2014 or Regulation 269/2014, or (ii) which could lead to the satisfaction of any claims in connection with measures imposed under both Regulations. Such recognition should be regarded as violating the public policy of the Union and the Member States
  
  • The Council noted that while the no-claims clauses of Regulation (EU) No 833/2014 or Regulation (EU) No 269/2014 prohibit out-of-court settlement proceedings, there is evidence to suggest that Russian parties or parties acting of their behalf  “seek or might seek to abusively initiate and pursue dispute settlement proceedings outside of the Union in connection with measures imposed under Regulation (EU) No 833/2014 and Regulation (EU) No 269/2014, or seek or might seek to illegally obtain recognition or enforcement of arbitral awards granted through such abusive dispute settlement proceeding.”
• Extension of the legal basis for compensation claims in Member State courts – In order to ensure the correct implementation of restrictive measures and the adequate protection of EU operators, competent authorities or the Union, shall be entitled to seek, recover in proceedings before a court of a Member State any damages incurred due to abusive dispute settlement proceedings initiated and pursued outside of the Union, directly or indirectly, by Russian persons.  
  
  • Extension of the legal actions scope – With the 18th package, Member States can take any appropriate measures to recover in judicial proceedings before the competent courts of a Member State, any direct or indirect damages, incurred as a consequence of investor-State dispute settlement proceedings brought against a Member State in connection with measures imposed under Regulation 833/2014 and Regulation 269/2014.
  • Extension of the 16th package forum necessitates – The forum necessitatis granted to Member States courts as part of the 16th package, in order to ensure the effective implementation of restrictive measures and to remedy possible situations of denial of justice, has been extended to the recovery of the abovementioned damages incurred as a consequence of investor-State dispute settlement proceedings.

4. Conclusion

With the 18th package, the EU adopted one of its strongest sanctions packages against Russia. This new package demonstrates the EU’s firm commitment to supporting Ukraine and maintaining pressure on the Russian economy through innovative measures, such as the catch-all provision aimed at preventing circumvention of the export ban on advanced technology items, and a broader intensification of efforts against sanctions evasion.

Guidance from the Commission is expected, including clarifications on the new import ban of third-country refined petroleum products made from Russian crude oil, particularly regarding the updated evidence requirements. Meanwhile, companies should ensure they have carried out and main up-to-date EU sanctions risk assessments and perform adequate risk-based due diligence.