Executive Summary
What is new: The EU adopted its 18th sanctions package against Russia and Belarus, imposing asset freezes on 55 additional individuals and entities, expanding sectoral sanctions and introducing new restrictions targeting the energy, financial and defense sectors.
Why it matters: These measures disrupt Russian and Belarusian military and industrial capabilities and raise important sanctions compliance considerations for stakeholders, especially those with multinational touch points or exposure to affected sectors.
What to do next: Stakeholders should carefully consider the impact of these measures on their activities and ensure that they are in compliance.
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On July 18, 2025, the European Union (EU) adopted its 18th package of sanctions against Russia, imposing asset freeze restrictions against an additional 55 individuals and entities,1 and taking significant action against Russia’s energy, financial and defense sectors, each already subject to extensive restrictions.2 As part of the EU’s strategy to disrupt Russian energy revenues, the EU has lowered its price cap for Russian crude oil to $47.60 per barrel from $60. The EU has also restricted imports of refined petroleum products from non-EU countries that are made from Russian crude oil. Under this package of sanctions, the EU has notably taken action against entities outside of Russia that the EU has determined are undermining its sanctions, including imposing asset freeze measures and transaction bans against such entities. The asset freeze restrictions against the listed individuals and entities entered into force on July 19, 2025, and the sectoral sanctions took effect on July 20, 2025.
As part of this 18th sanctions package, the EU also imposed additional restrictive measures against Belarus. These restrictive measures include asset freeze restrictions and sectoral sanctions that broadly mirror those against Russia, including trade restrictions on additional sensitive goods and technologies, as well as goods that could contribute to the enhancement of Belarusian industrial capacities.3 Like the sanctions against Russia, the asset freeze restrictions entered into force on July 19, 2025, and the sectoral sanctions took effect on July 20, 2025.4
The EU’s 18th package is one of the most extensive sanctions packages against Russia to date and was, to some degree, coordinated with the UK (see our July 29, 2025, alert “UK Sanctions Update: New Designations, Lowered Oil Cap and Continued Focus on Combatting Circumvention”). The new layers of measures raise important sanctions compliance considerations. Stakeholders should carefully consider the impact of these measures on their activities and ensure that they are in compliance.
Key Points
Asset Freezes
The EU has imposed asset freeze restrictions against 14 individuals and 41 entities under Council Regulation (EU) 269/2014 (Regulation 269).
The sanctions include full fledged listings (including asset freeze and travel bans) against actors involved in the so-called shadow fleet value chain, including Russian and international companies managing shadow fleet vessels, traders of Russian crude oil and a major customer of the shadow fleet.
In the context of the Belarusian sanctions program, the EU has also imposed asset freeze restrictions against eight entities involved in the Belarusian military complex.
Sanctions Targeting Russia’s Energy Sector
The EU has lowered the price cap for Russian crude oil to $47.60 per barrel from $60, which will take effect on September 3, 2025. The new sanctions include a new dynamic automatic mechanism to modify the EU’s price cap on Russian crude oil based on its average market price.
The EU has imposed a full transaction ban on the Nord Stream and Nord Stream 2 natural gas pipelines. No EU operator can engage in any transaction involving these pipelines with regard to the completion, operation, maintenance or use of these pipelines.
Starting on January 21, 2026, EU operators are prohibited from purchasing, importing or transferring petroleum products derived from Russian crude oil that are obtained from a non-EU country.
Sanctions were imposed on an additional 105 shadow fleet vessels the EU determined are engaged in sanctionable activities in support of the war in Ukraine. EU operators are prohibited from providing these vessels with access to EU ports and other services relating to maritime transport.
Financial Sector Restrictions
The EU has upgraded the prohibition to provide specialized financial messaging services (the so-called EU SWIFT ban) to certain Russian banks and financial institutions into a full transaction ban.
The full transaction ban is already in force for 23 banks that were already listed in Annex XIV of Council Regulation (EU) 833/2014 (Regulation 833).
For 22 newly listed banks in Annex XIV as part of the 18th sanctions package, the transaction ban will take effect on August 9, 2025.
The EU has also simplified the criteria 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.
The EU has implemented a transaction ban against the Russian Direct Investment Fund (RDIF).
Professional Services Restrictions
The EU has extended the scope of the ban on certain professional services to the provision of software with certain uses in the banking and financial sector, including automated teller machines (ATMs) and point of sale (POS) integration software.
Trade Measures
Regulation 833’s restriction on the sale, supply, transfer or export of advanced technology items and goods and technology that might contribute to the enhancement of Russian industrial and defence capacities has been expanded to six chemical compounds used to produce solid state propellants and two types of Computer Numerical Control machine tools used for the production of battlefield equipment.
The restriction on the sale, supply, transfer or export of goods which could contribute in particular to the enhancement of Russian industrial capacities has been expanded to cover additional machinery and appliances and certain metals, amongst other items.
Anti-Circumvention Measures
The EU has introduced a new catch-all provision for advanced technology items listed in Annex VII of Regulation 833. Under this provision, an EU national competent authority may impose an authorization requirement for the export of covered goods listed in Annex VII of Regulation 833 to third countries other than Russia if such a national competent authority informs the exporter that the items in question are or may be intended to an entity in Russia or for use in Russia.
The EU has broadened the listing criteria for imposing a transaction ban against non-EU banks, financial operators and crypto-asset service providers that are significantly frustrating the purpose of the prohibitions in Regulation 833 or Regulation 269.
The EU has extended the scope of the ban on transit via Russian territory to cover certain additional goods and technology used for construction and transport (see Economically Critical Goods).
Litigation and Arbitration
The EU has prohibited the recognition or enforcement of judgments or decisions, as well as requests for assistance, punishment or penalty relating to investor-state dispute settlement proceedings outside the EU involving the restrictive measures under Regulation 833 or Regulation 269.
The EU has extended the legal basis for member states to recover damages in the EU for any such damage that is the consequence of investor-state dispute settlement proceedings involving the restrictive measures under Regulation 833 or Regulation 269.
Asset Freezes
New Entities and Persons Listed by the EU
The EU has imposed asset freeze restrictions against 14 individuals and 41 entities under the latest round of sanctions. The sanctions target several Russian and non-Russian companies operating or managing shadow fleet vessels, traders of Russian crude oil, and a key customer of the shadow fleet. The EU has also designated a captain of a shadow fleet vessel for the first time and a crude oil refinery that is based outside of Russia and partly owned by a Russian entity. The asset freeze measures raise important sanctions compliance considerations for EU operators, including financiers, insurers and entities providing P&I coverage, when dealing with actors in the global energy trade. Other newly designated parties include Chinese, Indian, Hong Kong and UAE companies. More than 2,500 individuals and entities are now subject to an asset freeze under Regulation 269.
EU operators are required to freeze all funds and economic resources belonging to, owned, held or controlled by the listed persons. EU operators are also prohibited from making any funds or economic resources available, directly or indirectly, to or for the benefit of the listed persons.
Sanctions Targeting Russia’s Energy Sector
EU Price Cap Lowered to $47.60 Per Barrel From $60
In the context of EU sanctions, the price cap takes the form of an exemption from the ban on maritime transport, and technical assistance, brokering services, and financing or financial assistance related to the trading, brokering or transport of Russian crude oil and petroleum products to non-EU countries, if those products are purchased at or below $60 per barrel.
Under the 18th sanctions package, the EU has lowered the cap to $47.60 per barrel from $60 as set forth in Annex XXVIII of Regulation 833. The new EU price cap will apply on September 3, 2025.
Regulation 833 provides a wind-down period for contracts concluded before July 20, 2025, which were compliant with the $60-per-barrel price cap on the date the contract was concluded, until October 18, 2025.
Dynamic Automatic Procedure to Modify the EU Price Cap
The Council of the European Union (Council) has conferred powers to the European Commission (Commission) to monitor and calculate Russian crude oil prices on the basis of price assessments to be provided by authorized reporting agencies. Specifically, the Commission is required to calculate the average market price of Russian crude oil over a period of 22 weeks commencing on July 15, 2025, and for an equivalent period of 22 weeks every six months thereafter. The Commission is required to report its findings to the Council every six months and propose amendments as appropriate.
This dynamic procedure will ensure that the price cap is set at 15% below the average market price for Russian crude oil, calculated on a rolling basis over the previous six months. The cap will not change if the fluctuation in the market price during the reference period is less than 5%, providing stability and predictability for operators.
The Commission has issued a statement regarding action that it will take to support the EU shipping industry and counter the risk of de-flagging in the context of its sanctions. The EU stated that it will coordinate with partners in the oil price cap coalition to promote a joint approach to settling and implementing the price cap.
Transaction Ban on Nord Stream and Nord Stream 2
The EU has imposed a broad ban on transactions that are directly or indirectly connected to the natural gas pipelines Nord Stream and Nord Stream 2. The provisional regulation prohibits transactions involving the completion, operation, maintenance or use of the pipelines. However, the Council has stated that this should be understood as a full transaction ban.5 The restrictive measures also prohibit engaging, directly or indirectly, in any transaction relating to the financing of the completion, operation or use of these pipelines. The EU has clarified that the ban also covers the purchase of natural gas transported via either pipeline.
Unlike the transaction ban on state-owned enterprises, which explicitly prohibits EU nationals from holding positions in the governing bodies of targeted companies, the Nord Stream transaction ban contains no such explicit restriction. However, the Council (see below) and the Commission have clarified that the term “transaction” has to be interpreted broadly. According to the Commission, it includes any form of economically valuable benefit — such as services or payments — even where no formal contract exists.6
Regulation 833 provides certain exemptions and derogations with respect to the transaction ban on Nord Stream 1 and 2. For example, an EU national competent authority may authorize a transaction that is strictly necessary to wind down or restructure Nord Stream AG or Nord Stream 2 AG — where this is necessary to ensure the pipelines will not be used. Overall, the Council has emphasized that the exemptions and derogations to the transaction ban aim 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, in order to ensure that the pipelines will not be used.
EU Import Ban on Refined Petroleum Products Made of Russian Crude Oil
Starting on January 21, 2026, it is prohibited to purchase, import or transfer, directly or indirectly, covered petroleum products (under CN code 2710) obtained from a non-EU country made from Russian crude oil. The restriction also prohibits providing any direct or indirect technical assistance, brokering services, financing or financial assistance, as well as insurance and re-insurance, involving the covered petroleum products. This measure aims to prevent Russian crude oil from reaching the EU market in any form.
Regulation 833 provides an exemption for petroleum products imported from partner countries listed in Annex LI of Regulation 833, which includes Canada, Norway, the UK, the US and Switzerland.
Regulation 833 also states that importers are required to provide evidence of the country of origin of the crude oil used for the refining of a product in a relevant non-EU country unless the product is imported from a partner country set forth above.
Petroleum products imported from a non-EU country which was a net exporter of crude oil in the previous calendar year (i.e., a country that exports more crude oil than it imports) will be considered to have been obtained from such country’s domestic crude oil and not from Russian crude oil.
Targeting Russia’s Shadow Fleet
The EU continues to maintain pressure on Russia’s shadow fleet by sanctioning 105 new vessels that the EU has determined are contributing to Russia’s energy revenues by circumventing EU sanctions. The sanctioned vessels were added to Annex XLII of Regulation 833. EU operators are prohibited from providing a broad range of maritime services to the sanctioned vessels, including financing and financial assistance and brokering services.
According to the Commission, vessels can be listed on the basis of criteria such as the transport of military equipment, the transport of stolen Ukrainian goods such as grain, their participation in the shadow fleet transporting Russian oil and their support to the exploitation or development of the Russian energy sector such as the transport of LNG infrastructure or transshipment of Russian LNG. At the time of writing, a total of 444 vessels in Russia’s shadow fleet are now listed in the EU.7
Energy-Related Derogations and Exemptions
The EU has provided a new derogation allowing the competent authority of a member state that is (i) not directly connected to the interconnected natural gas system of any other member state and (ii) which received the first commercial supply of its first long-term natural gas supply contract after July 20, 2025, to authorize the purchase, import or transfer of Russian liquified natural gas falling under CN code 2711 11 to ensure its energy supply.
The Council has stated that the Paks II project continues to be exempt from the prohibitions in Regulation 833 pursuant to article 12h of the regulation, which also covers the new transaction ban set forth in Article 5h of Regulation 833 (as discussed further below).
Financial Sector Restrictions
EU SWIFT Ban Upgraded to a Full Transaction Ban
Under the new sanctions, the EU has upgraded the EU SWIFT ban into a full transaction ban against the financial institutions listed in Annex XIV of Regulation 833. The transaction ban also applies to any entity whose proprietary rights are directly or indirectly owned more than 50% by any such listed entity. EU persons are prohibited from engaging in any transaction with any entity that is subject to such a transaction ban.
The full transaction ban is in effect for 23 financial institutions that were already listed in Annex XIV under previous sanctions packages, and will apply as of August 9, 2025, for 22 newly listed financial institutions.
The EU has provided a derogation for transactions that are strictly necessary for divestment from or wind-down of business activities in Russia.
Simplified Criteria to Impose a Transaction Ban for Connecting to the SPFS
The SPFS financial messaging system was developed by the Central Bank of Russia (CBR) as an alternative to the SWIFT network used in other countries. EU sanctions prohibit EU businesses operating outside of Russia from directly connecting to the SPFS or any other equivalent specialized financial messaging services set up by the CBR or the Russian state.
Under previous sanctions, the EU established certain criteria for imposing a full transaction ban against non-Russian entities that use the SPFS or an equivalent financial messaging service set up by the CBR. Such criteria include, for example, a determination that the relevant entity is increasing Russia’s financial resilience by using the SPFS. Under the new sanctions, the EU has simplified the criteria and may now impose a full transaction ban on any non-Russian, non-EU bank that is simply connected to the SPFS.
Transaction Ban Against the Russian Direct Investment Fund
The EU has implemented a transaction ban targeting the Russian Direct Investment Fund (RDIF). Specifically, the transaction applies to:
(i) The RDIF.
(ii) A legal person, entity or body owned or controlled by the RDIF.
(iii) A legal person, entity or body, established outside the EU, in which the RDIF or a person referred to in item (ii) above has made, directly or indirectly, a significant investment (listed in Annex XLIX).
(iv) A legal person, entity or body, established outside the EU, providing investment services or other financial services to any entity referred to the RDIF or an entity referred to in items (ii) or (iii) above.
(v) A legal person, entity or body, acting on behalf or at the direction of the RDIF or any such entity referred to in items in (ii), (iii) or (iv) above.
The EU has determined that the RDIF remains an instrument used by Russia to channel foreign currencies into its jurisdiction, seek access to funds to sustain its war effort, and increase the resilience of its economy.
Professional Services Restrictions
Ban on the Sale of Software With Certain Uses in the Banking and Financial Sector
Regulation 833 also now prohibits EU persons from selling, supplying, transferring, exporting or providing, directly or indirectly, software with certain uses in the banking and financial sector to Russia. The restrictions also apply to related services in connection with the covered software or for their provision.
Annex XXXIX of Regulation 833 includes the following software with uses in the banking and financial sector:
- Online and mobile banking.
- Loan management.
- Automated teller machines (ATMs) and point of sale (POS) integration.
- Regulatory reporting.
- Investment banking.
Regulation 833 provides a wind-down period for contracts concluded before July 20, 2025, until September 30, 2025 (or an ancillary contract necessary for the satisfaction of such a contract).
Trade Measures
Export Control and Restrictions on Dual-Use Goods and Technology, Etc.
The EU further extended the scope of the export restrictions on dual-use goods and technology, advanced technology items and goods that could contribute in particular to the enhancement of Russian industrial capacities. According to the Commission’s Q&A on the 18th sanctions package, the new items in Annex VII of Regulation 833 include six chemical compounds used to produce solid state propellants, and two types of Computer Numerical Control machine tools used for the production of battlefield equipment, e.g., Kh-59 cruise missiles, unmanned aerial vehicles, helicopter components and tanks.
Furthermore, the EU has added the following items to Annex XXIII of Regulation 833: (i) machinery and appliances, notably machinery used in the energy sector, such as gas turbines; (ii) chemicals, in particular those used as raw materials in industry; (iii) certain metals such as refined copper and articles of copper, aluminium and articles of aluminium, and articles of steel; and (iv) plastics.
EU persons are prohibited from selling, supplying, transferring or exporting, directly or indirectly, the covered goods to or for use in Russia. The sanctions also prohibit providing any services, including brokering, technical or financial services, in relation to the covered goods.
Additional Entities Subject to Stricter Export Restrictions
Twenty-six entities connected to Russia’s military-industrial complex were added to Annex IV of Regulation 833, making them subject to stricter export restrictions with respect to dual-use goods and technology and advanced technology items. The newly listed entities also include Chinese, Turkish and Hong Kong entities that the EU determined have close links with the Russian military-industrial complex or are involved in circumventing EU sanctions.
Enforcement; Anti-Circumvention Measures
New Catch-All Provision for Dual-Use Goods and Advanced Technology Items
The EU has introduced a new catch-all provision in relation to restricted goods which might contribute to Russia’s military and technological enhancement or to the development of its defense and security sector (Annex VII of Regulation 833). Under this catch-all mechanism, a national competent authority of an EU member state may impose a prior authorization requirement for the export of items listed in Annex VII of Regulation 833 to a non-EU country if such EU national competent authority informs the EU operator that there is sufficient reason to suspect that the covered goods may be intended, in whole or in part, for an entity in Russia or for use in Russia.
This provision seeks address the risk of circumvention of EU sanctions through indirect exports to countries other than Russia. It provides member states, and in particular EU customs and export control authorities, with an additional tool to scrutinize shipments to non-EU countries and investigate suspicious shipments.
Expansion of Transaction Ban Criteria
Under the new sanctions, the EU has expanded the criteria for imposing a transaction ban on non-EU financial institutions and crypto-asset service providers to include:
Entities that are significantly frustrating the purpose of the prohibitions in Regulation 833 and Regulation 269.
Entities that support Russia’s war against Ukraine, including by processing transactions or providing export financing for trade operations that frustrate the purpose of Regulation 833.
Any entity that is not a credit or financial institution or an entity providing crypto-asset services that is significantly frustrating the purpose of the prohibitions set out in Articles 3m, 3n and 3s of Regulation 833 (oil-related prohibitions).
Under this provision, two Chinese financial institutions were added to Annex XLV of Regulation 833 and are now subject to a transaction ban.
Clarification of Scope of the EU’s Transaction Ban; Russian Parent/EU Subsidiary
In a recital of the regulation that amended Regulation 833, the Council states that the scope of the transaction ban set out in Article 5aa(1) of Regulation (EU) No 833/2014 (entities listed in Annex XIX) should be broadly interpreted and should encompass all kinds of transactions. The recital further states that in this context, with respect to the relationship between an EU subsidiary and a Russian parent company listed in Annex XIX of Regulation 833, the EU transaction ban should to a large extent result, in practice, in the de-coupling of the subsidiary from its Russian parent company.
The recital provides guidance regarding relevant actions that may help determine whether an EU subsidiary is acting on behalf or at the direction of its Russian parent company and is therefore also subject to the transaction ban.8 Such relevant actions include the appointment or dismissal of any authorized representatives of the EU subsidiary, or the EU subsidiary receiving instructions or obtaining approvals from an intermediary entity not engaged in operational business activities.
In the context of Article 5aa, the EU has introduced an exemption from the transaction ban for EU entities that are deemed to be acting on behalf or at the direction of an entity subject to a transaction ban under Article 5aa. The transaction ban does not apply if (i) an EU national competent authority has imposed a public trusteeship or similar public firewall measure, or (ii) an EU national competent authority has authorized a similar firewall measure, on such an EU entity.
Litigation and Arbitration
No-Claims Clause; Investor-State Dispute Settlement Mechanisms
The new sanctions include an additional provision under the no-claims clause of Regulation 833 which prohibits recognizing, giving effect or enforcing any injunction, order, relief or judgment of a non-EU judicial court pursuant to or derived from investor-state dispute settlement (ISDS) proceedings in relation to EU sanctions imposed under Regulation 833 or Regulation 269. The sanctions also include a similar prohibition on recognizing, giving effect or enforcing any request for assistance during an investigation or other proceeding, or punishment or other penalty, based on an injunction, order, relief or judgment of a non-EU judicial court pursuant to or derived from ISDS proceedings in relation to the sanctions under Regulation 833 or Regulation 269. These prohibitions apply when invoked by the covered persons defined in Article 11 of Regulation 833.
Per the Council, the effective implementation of the no-claims clause should be regarded as the public policy of the EU and its member states for the purposes of the recognition and enforcement of arbitral awards or judicial and administrative decisions. In this regard, recognizing or enforcing any injunction, order, relief or judgment of a non-EU court pursuant to or derived from an ISDS proceeding which could lead to the satisfaction of any claims in connection with measures imposed under Regulation 833 or Regulation 269 should be regarded as violating the public policy of the EU and its member states.
Compensation Claims
Regulation 833 provides that any member state 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 an ISDS proceeding brought against such relevant member state in connection with measures imposed under Regulation 833 or Regulation 269.
Member states’ courts are entitled to hear such compensation claims for damages based on forum necessitatis to ensure the effective implementation of restrictive measures and to remedy possible situations of denial of justice.
For further information, please contact:
Ryan D. Junck, Partner, Skadden
ryan.junck@skadden.com
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1 See Council Implementing Regulation (EU) 2025/1476 of 18 July 2025 implementing Regulation (EU) No 269/2014 concerning restrictive measures in respect of actions undermining or threatening the territorial integrity, sovereignty and independence of Ukraine.
2 See Council Regulation (EU) 205/1494 of 18 July 2025 amending Regulation (EU) No 833/2014 concerning restrictive measures in view of Russia’s actions destabilising the situation in Ukraine.
3 See Council Regulation (EU) 2025/1472 of 18 July 2025 amending Regulation (EC) No 765/2006 concerning restrictive measures in view of the situation in Belarus and the involvement of Belarus in the Russian aggression against Ukraine. See also Council Implementing Regulation (EU) 2024/1469 of 18 July 2025 implementing Article 8a(1) of Regulation (EC) No 765/2006 concerning restrictive measures in view of the situation in Belarus and the involvement of Belarus in the Russian aggression against Ukraine.
4 This client alert is for informational purposes only and does not constitute legal advice. Complex assessments often have to be made as to which sanctions regime applies in any given instance, given the multinational touch points of many entities and individuals. In that regard, given the complex and dynamic nature of these sanctions regimes, there may be developments not captured in this summary. Moreover, while the summary was accurate when written, it may become inaccurate over time given developments. For all of these reasons, you should consult with a qualified attorney before making any judgments relating to sanctions, as there are potentially severe consequences for failing to adhere fully to sanctions restrictions.
5 See Council of the EU, Press Release 18 July 2025: Russia’s war of aggression against Ukraine: EU adopts 18th package of economic and individual measures.
6 See European Commission FAQ on State-Owned Enterprises, p. 1.
7 As part of the 18th EU sanctions package, three LNG tankers were delisted by the EU.
8 While recitals of a regulation do not have the same binding effect as its articles, the Court of Justice of the European Union (CJEU) attaches significant importance to the recitals because they explain the legislative purpose, which traditionally plays a prominent role in the interpretation of EU legal acts.
This memorandum is provided by Skadden, Arps, Slate, Meagher & Flom LLP and its affiliates for educational and informational purposes only and is not intended and should not be construed as legal advice. This memorandum is considered advertising under applicable state laws.
