RUSSIAN OIL CAP – UPDATE

Introduction

On 18 July 2025, the EU adopted its 18^th package of sanctions against Russia. This sanctions package targets key sectors of the Russian economy including the energy, finance and military sectors, and trade with the EU. It also includes further measures targeting the “shadow fleet” and sanctions circumvention. The most significant measures are summarised below.

Listings

The 18^th package includes an additional 55 listings, consisting of 41 entities and 14 individuals who have undertaken actions undermining or threatening Ukraine’s sovereignty, independence and integrity. The total number of individual listings now stands at over 2,500.

In addition, 105 vessels have been listed due to their role as part of Russia’s “shadow fleet” in undermining the oil price cap (OPC), transporting military equipment for Russia or stealing Ukrainian grain. These vessels are now subject to Article 3s of EU Regulation 833/2014 which bans their entry to EU ports and the provision of various marine transport services. The total number of listed vessels now is reported to be 444.[1]

Other notable listings include the EU’s first listing of the Captain of a “shadow fleet” vessel, a major Indian refinery, a private operator of an international flag registry and entities which have undertaken trade with Rosneft.

Energy

As a result of recent decreases in the market price of crude oil, as part of the EU’s 18^th sanctions package, taking effect from 3 September 2025 the OPC will be lowered from the current USD 60 per barrel to USD 47.6 per barrel. A transitional period applies to persons with contracts executed before 20 July 2025 (and which were compliant with the OPC on the date of conclusion of that contract), who will have until 18 October 2025 to comply with the new lower OPC.

To assist the effectiveness of the OPC, the EU’s 18^th sanctions package introduces a new mechanism (in Article 3n(11) of EU Regulation 833/2014) by which the OPC will be adjusted depending on market conditions. This mechanism obliges the EU Commission to review price assessments to determine whether the OPC is equal to the average market price minus 15%. Should this requirement not be satisfied (and provided the variation is more than 5%), then from 15 January 2026 and for every six months thereafter, the EU Commission will amend the OPC to meet the required price.

To counteract circumvention, from 21 January 2026 it will be prohibited to import into the EU petroleum products that have been refined from Russian crude in third countries:

“Article 3ma

1.   It shall be prohibited, as of 21 January 2026, to purchase, import or transfer, directly or indirectly into the Union, petroleum products falling under CN code 2710 obtained in a third country from crude oil falling under CN code 2709 00 originating in Russia.

For the purposes of the application of this paragraph, at the moment of importation, importers shall provide evidence of the country of origin of the crude oil used for the refining of the product in a third country unless the product is imported from a partner country listed in Annex LI.

…

2.   It shall be prohibited to provide, directly or indirectly, technical assistance, brokering services, financing or financial assistance, as well as insurance and re-insurance, related to the prohibition in paragraph 1.”

This supplements existing EU bans on the import of Russian origin crude and petroleum products.

The partner countries listed in Annex LI are currently Canada, Norway, the UK, the US and Switzerland. The extended ban is subject to a transitional period and therefore will apply from 21 January 2026.

The EU’s 18^th sanctions package also introduces a transaction ban on engaging, whether directly or indirectly, in any transaction in connection with Nord Stream 1 and Nord Stream 2, in relation to their use, completion, maintenance or operation (new Article 5af of EU Regulation 833/2014). In addition, the ban applies to transactions financing the completion, use or operation of the pipelines. This ban is subject to limited exemptions.

Finance

The existing ban on providing specialised financial messaging services to the persons stated in Annex XIV (or any person majority control by them) in Article 5h(1) of EU Regulation 833/2014 (broadly comprising banks and financial institutions) has been extended such that it now constitutes a full transaction ban with the specified banks.[2] The number of banks subject to Article 5h(1) has also been extended to cover a number of additional Russian banks (with effect from 9 August 2025).[3]

Military

In order to restrain Russia’s military abilities, the EU has imposed sanctions on several suppliers to Russia’s military complex. As a result, 26 entities have been added to Annex IV of EU Regulation 833/2014 meaning they will now be subject to tighter export controls in relation to dual-use goods and technologies which may assist the Russian defence and security sector’s development.[4] Several of these entities are in third countries and are alleged to have partaken in the circumvention of sanctions.

The existing export ban on goods which may assist the enhancement of Russia’s industrial capabilities in Article 3k of EU Regulation 833/2014 has been expanded to cover additional items such as mineral substances and ores. Meanwhile, the existing ban on providing technical assistance, brokering, and financing in relation to items in the Common Military List, contained within Article 4 of EU Regulation 833/2014, has been expanded. The ban now also covers the act of transferring, selling, supplying or exporting, directly or indirectly, items in the Common Military List, whether they originate from the EU or not, to any person, body or entity in Russia or for use there.

Additional items have been added to the list of goods and technology subject to the ban on the transit of goods via Russia after export from the EU. These include constituent chemicals for propellants and various machine tools and additive manufacturing equipment.

Conclusions

In light of the ongoing situation in Russia and Ukraine, Members should take appropriate measures to protect themselves against the risks of sanctions breaches and being left without cover, especially when undertaking trade involving Russia.

Cover is not available to Members for any trade or action that breaches applicable sanctions and / or breaches the entry trading warranty.

Members should also ensure they undertake appropriate due diligence on any counterparties, ports, cargoes, vessels, and any other relevant parties as part of their trading to minimise the risk of sanctions breaches. Members should also ensure they keep complete and up-to-date records of this due diligence, and any further investigations.

[1] See Annex IV of https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=celex%3A32025R0932.

[2] See paragraph 15 of https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=celex%3A32025R1494.

[3] See Annex IV of https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=celex%3A32025R0395.

[4] See Annex I of https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=OJ:L_202501494.