EU update: 18th package of sanctions in reaction to Russia’s invasion of Ukraine

Published on 19 July 2025, the EU’s 18th package of sanctions targeting Russia tightens the screws on existing prohibitions:

• Price cap on Russian oil reduced to $47.60 per barrel, with introduction of a bi-annual revision mechanism to maintain the cap close to the cost of production and a stricter ban on imports of Russian oil derivatives, including via third countries.
• Full transaction bans on (i) operations related to Nord Stream 1 and 2 pipelines, (ii) 22 Russian banks, (iii) 2 Chinese crypto-asset service providers, (iv) RDIF and 4 RDIF-invested entities.
• Reinforced framework to ensure the efficiency of the ‘no claims clause’, introducing public policy grounds to reject the recognition, giving effect or enforcement of non-EU decisions or awards that would run counter the ‘no claims’.
• Expanded export controls, including the introduction of a catch-all mechanism and restrictions on software used in the financial sector as well as additional listings, including 105 vessels of the ghost fleet and 26 entities (incl. Turkish and Chinese) involved in exports of military technology.

ENERGY SECTOR

Most ostensibly, restrictions targeting Russia’s energy sector have been expanded, with the view on depriving it of a key revenue stream:

• From 21 January 2026 onward, imports and transfers of petroleum products (CN code 2710) obtained in a third country from crude oil of Russian origin (CN code 2709 00) will be prohibited. Technical and financial assistance, financing, brokering and (re)insurance related to such operations will also be banned. Imports from countries such as India can be expected to come under particular scrutiny.

Two exceptions are provided for.

• First, imports from “partner countries” for the importation of petroleum products, that is countries applying substantially equivalent restrictive measures, are exempt. For now, the countries covered by the exemption are Canada, Norway, the United Kingdom, the United States of America, and Switzerland.
• Second, Regulation (EU) n°833/2014 as amended (the “Sanctions Regulation”) provides for a presumption rebuttable by the authorities that imports from countries which were net exporters of crude oil in the year preceding the exports are of domestic crude oil, not crude oil from Russia. Considering their export capacities outweigh domestic consumption, exporters from countries such as Saudi Arabia, Kuwait or the UAE should typically be in a position to benefit from this presumption.

Importers will have to provide documented proof of the origin of the crude oil used for refining. The Commission is to publish guidance on the implementation of the import ban, with special attention for the demonstration of the origin of the imports.

The import ban will have a significant impact on the sector and supply chains as it will require importers to revise their sourcing, assess trade relationships with partner countries, and carry out additional compliance checks, including on traceability of the product along the chain. As ancillary services, including (re)insurance will also be prohibited, providers of such services are also to revise their operations accordingly. That said, compliance mechanisms adopted to comply with the oil price cap (and system of tiering in compliance expectations) should provide helpful guidance.

• Next, as of 3 September 2025, the crude oil price cap will be lowered to $47.6 per barrel and subject to a semi-annual review. For contracts concluded before 20 July 2025 and complying with the previous cap of $60 per barrel, this will remain applicable until 18 October 2025.

The method for determining the price cap will be adjusted to provide more flexibility in its review. The reduced price cap is to be set at a level as close as possible to the Russian cost of production of the oil, with a view on depriving Russia of any profits on its exports.

Specifically, the Commission will be able to revise the price cap every six months. To do so, it will determine an average market price for Russian crude over 22 weeks, and set the cap at that level diminished by 15% – unless this amount is within a 5% difference of the price cap applicable at the time the amount is determined. The amount will be published in annex to the Sanctions Regulation and should apply as of the following month.

Importantly, the Sanctions Regulation explicitly provides this mechanism does not in any way affect the unanimity rule for the adoption of sanctions under the CFSP.

These revisions will require increased monitoring on the part of European players involved in the industry. Contractual terms and conditions will likely need to be amended to provide for the flexibility needed in revising prices in alignment with the revisions published by the Commission.

• A new framework for targeted transaction bans has been introduced: as of 20 July 2025, the Nord Stream and Nord Stream 2 projects are subject to a full transaction ban (akin to the one already in place on Annex XIX entities).

Any transaction related to the construction, operation, maintenance or use of these gas pipelines is now prohibited, including financing or related services. The full transaction ban exclusively applies to activities related to these gas infrastructure projects, without affecting entities involved in respect of operations unrelated to the two targeted projects. Some exceptions are nevertheless provided for, e.g. in relation to the execution of court orders, wind-down operations or maintenance required to avoid risks to the environment, safety or fishing.

• A further number of additional restrictions and exception grounds have also been introduced, with impact on the energy sector:
  • The previous exemption for imports of Russian crude oil via pipeline to the Czech Republic will end as of 1 July 2025 since the country has sufficiently diversified its sources of supply. It is recalled that Member States are to seek alternatives to Russian imports of crude so that imports thereof can be further restricted.
  • A new exception ground is introduced to the prohibition on the purchase and import of Russian LNG through EU LNG terminals not connected to the interconnected natural gas system.

Specifically, the purchase, import or transfer of Russian LNG may be authorized by the authorities of a Member State that is (i) not directly connected to the system of another Member State and (ii) which received the first commercial supply of its long-term natural gas contract after 20 July 2025. At time of writing, the exception appears tailor-fitted to Cyprus’ situation.

This should also be read in context of the proposed Regulation on phasing out Russian natural gas imports (from 17 June 2025) which calls for a ban on all new import contracts (concluded after 17 June 2025) for Russian gas from 1 January 2026, as well as the termination of imports under short-term contracts from June 2026 (with targeted exceptions for landlocked countries) and long-term imports by 31 December 2027. It also includes a ban on access to LNG terminal services for Russian companies, as well as reinforced transparency obligations for importers. Member State would also have to draw up national diversification plans by March 2026, specifying volumes still affected and substitution measures envisaged.

These measures, the adoption of which is intended to take place before the end of 2025 to achieve implementation from January 2026 onwards, are likely to have a significant impact on importers, on (Russian or Russian-controlled) users contracting with terminals, and on LNG terminal operators themselves.

• The EU port ban has also expanded to 105 Russian vessels from the « shadow fleet« , restricting both port access by the vessels, as well as the provision of services necessary to their operation (e.g. chartering, bunkering, (un)loading, tugging, etc.).
• Lastly, certain exemptions are introduced to the full transaction bans affecting certain ports, locks and airports in Russia, in line with the EU’s commitment not to hinder third countries’ energy security: (i) coal (e.g. from Kazakhstan) merely transiting through Russia or (ii) operations related to civil nuclear

FINANCIAL SERVICES

New prohibitions have been introduced targeting links in circumvention schemes as well as aiming to crippling the operational capabilities of the Russian financial services providers:

• Expansion/introduction of full transaction bans:
  • Third country entities can be designated for using the System for Transfer of Financial Messages (SPFS) of the Russian Central Bank or equivalent specialised financial messaging services have been expanded (doing away with earlier requirements of participating in circumvention schemes).

Only Bank BelVEB, Belgazprombank and VTB Bank (PJSC) Shanghai Branch are currently subject to this full transaction ban.

• Third country entities dealing providing crypto-asset services and participating in circumvention of sanctions, may be designated by reason of their “significantly frustrating the purpose of the prohibitions”, whether (i) sectoral sanctions and asset freezes, (ii) trade financing, or (iii) oil and petroleum trade.

Two Chinese crypto-asset service providers have been designated under the first of these grounds: (i) Heihe Rural Commercial Bank Co. Ltd. and (ii) Heilongjiang Suifenhe Rural Commercial Bank Co. Ltd. The full transaction ban will apply to these entities as from 9 August 2025.

• The Russian Direct Investment Fund (RDIF), entities it owns or controls, as well as entities listed as being significantly invested by the former or and entities acting at the direction of either such entities, are also subject to a full transaction ban. Limited exceptions are possible in relation to pharmaceutical and medical products as well as, till 31 December 2026, for divestment or wind-down operations.

Recitals to the Sanctions Regulation set out that a ‘significant’ investment by the RDIF (and which may lead to an entity being listed, and subject to a full transaction ban) if it “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”, which includes financial services, telecom, defence, oil and gas and advanced technologies. To date, four entities are listed under this ground: VizorLabs LLC, Kama (Atom) JSC, BitRiver LLC and Labadvance LLC.

• Conversion of the SWIFT-exclusion into a full transaction ban and addition of 22 entities to the full transaction ban, including T-Bank, Yandex Bank or Lanta Bank, applicable as of 9 August 2025. Limited exceptions are added, including for diplomatic and wind-down or divestment purposes, for EU nationals resident in Russia, as well as for certain transactions with Bank Zenit (incl. certain soaps).

Recitals to the Sanctions Regulation clarify that, without prejudice to the ‘best efforts’ obligation, since EU sanctions “do not have extra-territorial effect and do not bind operators incorporated under the laws of third countries, including those of Russia”, dealings between EU entities and their third country subsidiaries remain outside the scope of the prohibition, even if an entity subject to the transaction ban is involved.

• An exemption has been added to the full transaction ban of Article 5aa(1) (and related Annex XIX), covering EU entities separated from their sanctioned Russian mother entities through the application of public trusteeships or equivalent firewalls.
  • The exemption echoes the interpretative remarks set out in the Recitals to the Sanctions Regulation, calling for the broad interpretation of the transaction ban. The Commission clarifies “all kinds of transactions” are covered by the ban. It makes clear that EU subsidiaries acting under the control or instruction of listed Russian parent companies may fall under the ban, requiring functional separation (de-coupling) between them.

In particular, the Commission notes that, even indirectly, seeking approval from the designated mother entity, or executing its instructions, could lead to these subsidiaries (even in the EU) being considered as acting at the direction of designated entities and, as a result, subject to the full transaction ban. To avoid such disruptive consequences, separation from the mother entity and implementation of stringent firewalls would be need required.

• The broad interpretation called for in the Recitals for the full transaction ban on Annex XIX entities may also serve to interpret the other, now several, provisions setting out full transaction bans.

The full transaction bans completely sever commercial ties with designated entities. By reason of entities owned, controlled or directed by targeted entities also being subject to the full transaction ban, it requires thorough due diligence, several degrees up in ownership and governance structures. As the Commission notes that “the appointment or dismissal of any authorised representatives of the Union subsidiary, or the receipt of instructions from, or approvals by, an intermediary entity not engaged in operational business activities” may indicate the subsidiary is acting ‘at the direction’ or ‘on behalf of’ the Russian designated entity, such rather low-intensity indications should be integrated into compliance due diligence carried out.

Integration of such considerations in client relations and revision of contractual terms and conditions to account for such situations will need to be implemented.

• A ban on exporting banking software to Russian entities has been introduced, with a temporary grace period for existing contracts until 30 September 2025.

Unlike management, design and manufacturing software already covered by the prohibition, the banking software covered by the prohibition is defined by its use, as follows: online and mobile banking, loan management, automated teller machines (ATM) and point of sale (POS) integration, regulatory reporting, investment banking. Such is likely to require a purposive approach to identify whether any given software is covered by the prohibition.

DISPUTE RESOLUTION

New prohibitions have been introduced to prevent sanctions circumvention through legal or arbitral proceedings. This affects the possibility of having recourse to and the outcome of such proceedings:

• EU Member States are barred from recognising, giving effect to or enforcing any injunction, order, relief, judgement or decision from any court, arbitral or administrative proceeding in a third country and could give rise to the satisfaction of claims brought by a sanctioned or Russian party connected to EU sanctions. Similarly, no assistance can be provided nor punishments or penalties recognised, given effect to or enforced in such cases.

Effective application of the no claims clause (broadly interpreted and including, among others, private settlements) participates in ensuring the effectiveness in the prohibitions imposed, as well as it seeks to ensure the financial burden of compliance with the prohibitions is not shifted back to complying EU businesses.

For these reasons, the enforcement of the no claims clause (as the Sanctions Regulation it seeks to ensure the efficiency of) is of public policy in the EU and its Member States. Recognition, effect given to or enforcement of any decision or award that may have effects adverse to those sought by the no claims clause would, therefore, be contrary to EU public policy and should be rejected.

The introduction of the prohibition could be the EU’s pre-emptive response to allegations being made that the EU sanctions’ “no claims clause” could constitute expropriation of foreign (Russian) investors, paving the way to ISDS claims against EU Member States.

• Conversely, Member States are required to actively defend themselves, raising “any available objection” to the recognition and enforcement of ISDS decisions against them and handed down in connection with EU sanctions. In addition, they are to use all available means available to recover damages resulting from ISDS proceedings directed against them in connection with the sanctions before EU courts.

This is consistent with the approach to refuse any recognition or enforcement of decisions handed down. Recitals to the Sanctions Regulation call on Member States to, for example, rely on the 1958 Convention on Recognition and Enforcement of Foreign Arbitral Awards when invoking public policy grounds that would prevent recognition or enforcement of the award.

• This reinforced framework above all seeks to ensure maximal effectiveness of the no claims clause by explicitly acting against the use of courts or arbitral instances in non-EU jurisdictions. When directed against non-EU entities of European corporate groups, these provisions – and no claims clause – should be read in the context of the ‘best efforts’ obligation which prevents the undermining of the effectiveness of the prohibition by non-EU entities of EU groups. The reinforced set of provisions also seeks to shield EU businesses and Member States from potentially very hefty penalties under claims stemming from the application of sanctions, and brought in non-EU proceedings.

TRADE

Export restrictions have been expanded and anti-circumvention measures reinforced, especially with the introduction of a ‘catch-all’ mechanism:

• The most important novelty of the 18^th package’s export prohibitions consists in the introduction of a ‘catch-all mechanism’ that may be triggered in relation to items listed in Annex VII of the Russia Sanctions Regulation. The annex includes goods and technology listed as having the potential to contribute to Russia’s military and technological enhancement, or the development of its defence and security sector.

The mechanism is meant as an additional tool for Member States to preventively block indirect flows of listed items to Russia where it is suspected the flows to third countries could be redirected to Russia in circumvention of applicable prohibitions. The catch-all tool complements the existing export bans which already include a prohibition on indirect flows (and circumvention).

In practice, the ‘catch-all mechanism’ should operate in the same manner as the catch-all clause of the EU Dual-Use Regulation, to which the Sanctions Regulation refers. It does not introduce a general requirement to obtain prior authorisation for exports of the items listed. Rather, each Member State may notify exporters that controls will apply. Member States could also use the mechanism to ramp up enforcement and conduct investigations.

To the extent prior authorisations may be required on certain items, increased compliance will be expected on part of exporters. Depending on the extent of the due diligence required and on the capacity of the national competent authorities to deal with the authorisation requests, delays, suspension and/or cancellation of shipments could be expected.

• 26 entities have been added to the list of entities subject to export bans on dual-use items. The list includes 11 entities located in China, Hong Kong, and Turkey, added by reason of their facilitation of circumvention of export restrictions on dual-use goods and advanced technologies.

As the list of targeted entities grows longer, increased caution is called for when engaging in export operations dealing with dual-use items. Particularly by reason of the prohibition on circumvention and indirect exports also being covered by the prohibitions, it is key to cover all parties involved in a given transaction in the compliance assessment with a view on ensuring items would not end up with prohibited entities through indirect or convoluted schemes.

• Advanced technology items such as propellant chemicals and computer numerical control (CNC) machines have been added to the list of items subject to export prohibitions, as have certain industrial goods including certain machinery, chemicals, metals, and plastics. The list of goods prohibited from transiting through Russian territory has also been extended to cover a series of tools and machinery.
• To the extent not already the case, economic players dealing with items subject to restrictions are advised to review compliance mechanisms in place, as well as to (re)assess contractual terms and conditions to ensure it secures enough manoeuvring space to comply without being negatively affected.

ASSET FREEZE MEASURES

The list of individuals and entities subject to individual sanctions has been further expanded:

• The EU has imposed travel bans and/or asset freezes on 14 persons and 49 entities have been designated under travel bans and/or asset freeze measures. These designations mainly concern the Russian energy sector, the ghost fleet value chain and the military-industrial complex, with some specifically linked to concerns about circumvention.
• Asset freeze measures have been imposed on 18 entities located outside Russia, mainly in China, India, and the UAE, for their links to circumvention of restrictions on energy products and involvement in the Russian so-called shadow-fleet.

Indian company Nayara Energy, which operates an important refinery and Vadinar that is 49%-owned by Rosneft and the 2Rivers Group (made up of Singapore-based 2Rivers PTE Ltd. and Dubai-based 2Rivers DMCC) are both included in the list of targeted entities.

FOCUS ON BELARUS

As part of its ongoing sanctions against Belarus, the EU has also extended prohibitions on Belarus:

• Addition of certain energy materials and precursors as well as certain machine parts, assemblies and components to the list of items subject to export controls, and expansion of the list of entities subject to export bans on dual-use and advanced technology items.
• Import and export ban on military items listed under the EU Common Military List.
• Adoption of a ‘catch-all mechanism’ on certain sensitive items (see supra in relation to Russia).

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Gide’s International Trade & Regulation team in Brussels will provide further updates and guidance as matters continue to unfold.

Our Team will gladly assist in case of any questions or need for legal assistance in ensuring compliance when dealing under the newly adopted sanctions.