The EU’s 18th sanction package on Russia; Additional compliance required

The Council of the European Union (the “EU”) adopted on 18 July 2025, what is considered one of the most forceful sanctions packages against Russia. The aim is to strike at the core of Russia’s war machine – targeting its energy revenues, financial sector, and military-industrial complex. This blog post highlights the key measures introduced in the 18th sanctions package.

Please find our previous blog posts on the sanctions here, here, here and here.

Russia’s energy revenues

A key focus of the 18th sanctions package is to undermine Russia’s energy revenues, which continue to be a major source of funding for the war against Ukraine. Thus, the EU has lowered the oil price cap – originally introduced in December 2022 to limit the price at which Russian oil can be sold – from 60 to 47.6 USD. The EU also introduces an automatic and dynamic mechanism for its review in the future, ensuring that the cap is always 15% lower than the average market price. The aim is to create predictability for operators while maintaining pressure on Russia’s energy revenues. Oil exports still represent one third of the Russian government’s revenues.

The EU has furthermore listed 105 additional vessels that are part of Russia’s so-called “shadow fleet”, which attempts to evade the oil price cap, or which transport military equipment for Russia or stolen Ukrainian grain and engage in other unsafe shipping practices. The listed vessels are subject to a port access ban and are prohibited from receiving a broad array of maritime and other services. The total number of listed vessels is now 444.

There is also a new ban on the import of refined products made of Russian crude oil. EU operators will be prohibited from purchasing, importing, or transferring petroleum products obtained in a third country from Russian crude oil, with the exception of Canada, Norway, Switzerland, the United Kingdom and the United States. The ban also applies to related services, including technical or financial assistance. This measure requires particular attention from EU operators, as tracing the origin of oil through complex processes can be challenging. There is also a new transaction ban on Nordstream 1 and 2. The aim of this is to prevent the resumption or the establishment of natural gas supplies through the pipelines.

Russia’s banking sector

The 18th sanctions package targets the Russian banking sector. The package converts the existing ban on specialized financial messaging services into a full transaction ban. This means EU firms are banned from doing any business with the listed entities. An additional 22 banks have been listed, bringing the total to 45. The transaction ban is furthermore extended to third-country financial institutions, including crypto-asset providers that help circumvent sanctions, support Russia’s war or are connected to Russia’s financial messaging service.

A new prohibition targets the Russian Direct Investment Fund (“RDIF”) including its subsidiaries, investments and financial institutions supporting them. This new measure prohibits engaging with any legal person, entity or body in which the RDIF holds any ownership or investments.

In addition, there is a new ban on selling, supplying, transferring, and exporting software management systems and software with certain uses in the banking and financial sector.

Russia’s military-industrial complex

The 18th sanctions package tightens export restrictions and bans. It includes restrictions on additional advanced technologies such as chemical compounds used to produce solid state propellants and two types of CNC machine tools used for production of battlefield equipment.

Additionally, the package imposes export bans covering machinery and appliances, chemicals, metals and plastics, corresponding to almost €2.1 billion of exports in 2024 terms.

Anti-circumvention measures

To prevent attempts to circumvent the sanctions, the new package introduces strengthened anti-circumvention measures. A total of 26 entities is added to the list of those supporting Russia’s military-industrial complex or involved in sanctions circumvention, including 15 based in Russia and 11 in third countries (seven in China and Hong Kong, and four in Turkey).

Additionally, the transit ban is expanded by adding eight Combined Nomenclature codes from the list of Economically Critical Goods that cannot transit through the territory of Russia when exported from the EU to third countries.

The package also includes a dedicated catch-all provision that aims at addressing the risk of circumvention via third countries involving advanced technology goods. It empowers Member States with an additional tool to scrutinize, stop and investigate suspicious shipments to third countries.

Protection from illegitimate Bilateral Investment Treaty (BIT) arbitration proceedings

The EU has also introduced measures to protect Member States from illegitimate Bilateral Investment Treaty (BIT) arbitration proceedings launched by Russian companies and individuals, including oligarchs and their proxies. This includes the possibility for Member States to recover any damages incurred as a consequence of investor-to-state dispute settlement proceedings brought against them.

Accountability

The 18th package also reinforces the EU’s efforts to hold individuals accountable for Russia’s violations of international law, designating 14 individuals and 41 entities. Those listed are subject to asset freezes and a prohibition to make funds and economic resources available to them. This hit those responsible for the indoctrination of Ukrainian children, Russian propaganda, and the manipulation of Ukrainian cultural heritage. With these new additions the number of individual listings exceeds 2,500.

Additional measures against Belarus

The package also includes additional measures on Belarus, e.g. prohibiting arms procurement from Belarus and adding a catch-all provision for advanced technology items, and a full transaction ban on specialised financial messaging services.

Concluding Remarks

All companies operating in the EU must ensure compliance with the new as well as the previous sanctions and are expected to implement appropriate policies, controls, and procedures to mitigate and manage compliance risks. Failure to comply with EU sanctions can result in severe consequences, including administrative fines and criminal liability. Delphi is as always happy to assist companies with ensuring compliance with applicable sanctions regimes.