The EU Adopts 18th Sanctions Package

On 18 July 2025, the Council adopted its latest sanctions package against Russia. This new package is one of the strongest to date and maintains pressure on Russia by imposing stringent economic and individual restrictive measures that target Russia’s energy, banking, and military sectors.

Individual sanctions

• This latest round adds 14 individuals and 41 entities to the list of designated persons subject to asset freezing measures, raising the total number of designated persons to over 2,500.

Amongst the new listings, asset freezes and travel bans have been imposed on entities involved in managing shadow fleet vessels, traders of Russian crude oil, an Indian refinery owned by Rosneft, as well as entities involved in Russia’s military industrial complex, including a Chinese company supplying goods used on the battlefield.

Energy sector

• The crude oil price cap has been reduced to USD 47.6 per barrel, with a new automatic mechanism to ensure that the price cap always remains sufficiently low, considering price fluctuations.
• To constrain the activity of vessels that are part of the ‘shadow fleet’ of oil tankers or that contribute to Russia’s energy revenues, the EU added 105 vessels which are now banned from Member States’ ports and locks, as well as from receiving a broad range of services related to maritime transport, such as operating or crewing, flag registration, insurance, ship brokering, bunkering, ship supply, crew changes, cargo loading and discharge, fendering and tug services.
• While it is prohibited to import Russian LNG through LNG terminals that are not connected to the EU’s interconnected natural gas system, the new sanction package introduces a derogation to this prohibition to Member States that are not directly connected to the interconnected natural gas system and that receive the first commercial supply of first long-term natural gas supply contract after 20 July 2025.
• The new package imposes an import ban on refined petroleum products falling under tariff heading 2710 from any third country when obtained from Russian crude oil falling under tariff heading CN 2709, as of 21 January 2026. Importers are required to provide evidence of the country of origin of the crude oil used for the refining of the product in a third country, except when the product is imported from one of following partner countries: Canada, Norway, Switzerland, the United Kingdom and the United States. In addition, petroleum products imported from third countries that were net exporters of crude oil in the previous calendar year are considered to have been obtained from domestic crude oil, rather than Russian crude oil, unless there are reasonable grounds to believe that the products were obtained from Russian crude oil.  The package already announces that the Commission will issue a guidance on the implementation of this provision, notably regarding the evidence to be provided by operators engaged in the import of refined petroleum products.
• The EU implements a total transaction ban on Nord Stream 1 and 2. These two pipelines were built to transport natural gas from Russia to the Union and are controlled by the Russian Government.  The EU now bans any transactions that is directly or indirectly connected to these natural gas pipelines and that concern the completion, operation, maintenance or use of the pipelines or parts of the pipelines. The ban also covers the purchase of natural gas transported via the pipelines.
• The EU removes the exemption that allowed the importation of crude oil from Russia to Czechia.
• Member States are invited to take all necessary measures to obtain alternative supplies to Russian crude oil imports by pipeline, so that these imports are made subject to the prohibitions as soon as possible.

Banking sector

• The EU transforms the existing ban on the provision of specialised financial messaging services with certain Russian banks into a full transaction ban: EU companies are now banned from doing any business with the 23 already sanctioned Russian banks, plus 22 new banks added by the 18^th sanctions package. Therefore, 45 Russian banks are now subject to a transaction and messaging ban. The banks are listed in Annex XIV and the prohibition also covers any legal person, entity, or body established in Russia that is owned for more than 50% by the listed banks. However, the package is silent as to whether the prohibition extends to legal person, entity or body that could be controlled by the listed banks.
• The EU expands the transaction ban for third-country credit and financial institutions, including crypto asset service providers, who help circumvent sanctions, support Russia’s war of aggression against Ukraine, or are connected to Russia’s financial messaging service. EU operators are prohibited from conducting transactions with any of those financial operators.

The amended provision also includes a transaction ban on other third-country operators, which are not credit or financial institutions nor entities providing crypto asset services that significantly frustrate other restrictions, and notably oil-related prohibitions.

• A complete ban on transactions targeting the Russian Direct Investment Fund (RDIF), its subsidiaries, its significant investments and anyone providing those entities with investment services or other financial services. The prohibition also covers 4 entities in which the RDIF has made significant investments. The RDIF is an instrument used by Russia to channel foreign currencies into its jurisdiction, to seek access to funds to sustain its war effort and to increase the resilience of its economy.
• A prohibition on the sale, supply, transfer, and export of software management systems and software used in the banking and financial sector.

Military sector

• The EU adds 26 entities to Annex IV, on which are imposed tighter export restrictions regarding dual-use goods and technology, as well as goods and technology that might contribute to the technological enhancement of Russia’s defence and security sector (Annex VII). Some entities located in third countries other than Russia, such as China, Hong Kong, and Turkey, were added, given their indirect contribution to Russia’s military and technological enhancement, thereby enabling circumvention of export restrictions.
• The EU expand the list of items subject to an export ban, to include items that Russia has used in its war of aggression against Ukraine and items contributing to the development or production of its military systems, such as computer numerical control (CNC) machines and constituent chemicals for propellants.

Trade measures

• The EU expanded the list of goods which might contribute to the enhancement of Russian industrial capacities and subject to an export ban, adding notably some machinery, chemicals, metals and plastics to the list.

Preventing circumvention

• To strengthen the effectiveness of the EU’s restrictive measures and address the risk of circumvention, the sanctions package now provides Member States with an optional administrative mechanism that enables national competent authorities to require prior authorisation for exports of items listed in Annex VII (covering goods that contribute to Russia’s military and technological enhancement or the development of its defence and security sector) to any third country where the exporter has been informed that there is sufficient reason to suspect that the end destination of the items may be Russia, or to suspect that the end-use of the exported item may be for Russian entities.  This measure, which acts as a catch-all clause, does not affect the indirect export prohibition, and it is for Member States to decide whether that measure or the indirect export prohibition clause should apply.
• To minimise the risk of circumvention, the EU further extended the list of goods and technologies subject to a prohibition on transit via the territory of Russia. The EU added 8 Combined Nomenclature (CN) codes to the list of items subject to a transit ban, including construction, heating, tractors and trailers products.

Transaction ban

The EU clarifies the scope of the transaction ban of Article 5aa, which prohibits EU operators from engaging directly or indirectly in any transaction with certain publicly controlled entities or with over 50% public ownership or in which Russia, its government or Central Bank has a right to participate in profits or a substantial economic relationship. The entities concerned are listed in Annex XIX.

In the new package, the EU clarifies the scope of the transaction ban in relation to a Union subsidiary of a Russian parent company listed in Annexe XIX. According to the new package, Union subsidiaries can be covered by this transaction ban if they are acting on behalf of or at the direction of an entity listed in Annexe XIX. The 18^th sanctions package introduces an exception, adding that the transaction ban would not apply to entities established in the Union and acting on behalf of or at the direction of entities listed in Annex XIX if the competent national authorities have imposed a public trusteeship or similar public firewall measure on the Union subsidiary or a similar firewall has been authorised by the authorities to ensure the continued functioning and compliance with restrictive measures by the Union subsidiaries.

Investor-State dispute settlement proceedings

The 18^th package introduces measures to protect Member States from Bilateral Investment Treaty arbitration proceedings initiated by Russian companies and individuals in connection with sanctions imposed by the Commission against Russia.

Member States cannot recognise or enforce foreign judicial or arbitral decisions related to investor-State dispute settlement proceedings against a Member State that could lead to the satisfaction of claims related to sanctions. In addition, the new package includes the possibility for Member States to recover any damages incurred because of investor-State dispute settlement brought against them.

When faced with arbitral awards from investor-State disputes in connection with sanctions, Member States must raise any available objections in domestic or foreign courts, such as the violation of public policy in the country where the recognition or enforcement of such awards is sought.

Belarus

Regarding restrictive measures on Belarus, the 18th package aligns trade restrictions imposed on Belarus with those placed on Russia by:

• Imposing a catch-all provision for advanced technology items;
• Protecting Member States from investor-State dispute settlement processes related to restrictive measures on Belarus;
• Expanding the list of items contributing to Belarus’s military and technological enhancement or to the development of its defence and security sector by adding items that Russia has used in its war against Ukraine and items which contribute to the development or production of Belarus’s military systems, including chemical precursors to energetic materials, spare parts for machine tools, additional computer numerical control (CNC) machines and constituent chemicals for propellants;
• Extending the list of goods subject to export restrictions contributing to the enhancement of Belarusian industrial capacities, to machinery, chemicals, certain metals and plastics;
• Extending the list of goods and technologies covered by the transit ban;
• Transforming the ban on specialised financial messaging services into a full transaction ban;
• Adopting asset freezing measures against eight Belarusian entities and subjecting Legmash Plant OJSC to stricter restrictions;
• Imposing an import ban on arms from Belarus.

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Please do not hesitate to get in touch with Cassidy Levy Kent’s sanctions team in Brussels, or your usual contact in any of Cassidy Levy Kent’s offices, with any questions.