The EU Adopts Broad New Sanctions Against Russia, Including 17th and 18th Packages, and Belarus Sanctions Alignment Package

Aug. 7, 2025 – The European Council ended a highly active semester on the economic sanctions front with the adoption of its 17th and 18th economic sanctions packages (Russia Sanctions Packages or Sanctions Packages) against Russia for its continued war of aggression against Ukraine, adopted on May 20 and July 18, respectively (I). On July 18, the council also agreed on an additional alignment sanctions package against Belarus for its involvement in Russia’s war (Belarus Sanctions Alignment Package) (II). Amendments to the Russian hybrid threats sanctions program (Hybrid Threats Program) were also introduced on May 20 (III). Additional designations targeting Russian parties were also made pursuant to other EU sanctions programs (IV), and the European Commission (EC) also updated its FAQ to the Ukraine-related sanctions programs (V).

EXECUTIVE SUMMARY

Key takeaways from the 17th and 18th Russia Sanctions Packages

• Extensive new measures targeting the energy sector: The 17th and 18th Sanctions Packages significantly broaden the EU’s restrictive measures focused on the energy sector, targeting refined products, pipeline infrastructure and price mechanisms to close key existing circumvention channels.

  • Lowering of the oil price cap. The 18th Sanctions Package reduces the price cap on Russian crude oil from $60 to $47.60 per barrel, with a dynamic mechanism to keep it 15% below market price.

  • Ban on refined oil products from Russian crude. Purchases, imports and transfers of refined products derived from Russian crude are now prohibited, even if processed in third countries (there are exceptions for five “partner countries”).

  • Full transaction ban on Nord Stream 1 and 2. For the first time, all transactions involving the Nord Stream pipelines are explicitly banned.

• Focus on combating Russia’s shadow fleet: While the 15th Sanctions Package contained initial measures targeting Russia’s shadow fleet, the 17th and 18th Sanctions Packages represent a significant step up to fight the transportation of Russian crude through a network of vessels to circumvent the price cap on such products by extending sanctions across the full supply chain of these opaque and high-risk oil transport operations.

  • Expansion of the vessel backlist. The 17th and 18th Sanctions Packages add 294 ships to the EU sanctions list, bringing the total number to 444 vessels linked to Russian oil transport and sanctions evasion.

  • First sanctions of an individual and an entity in connection with shadow fleet activities. For the first time, the EU listed an individual directly linked to Russia’s shadow fleet, namely a ship captain and an Indian national, as well as the United Arab Emirates-based flag registry company Intershipping Services LLC, which operates the Gabon international flag registry.

  • Inclusion of refined product transshipment. Vessels involved in transporting refined oil products derived from Russian crude — even if processed in third countries — now fall within the scope of the restrictions.

• New financial sector restrictions: Building on earlier restrictions, the latest packages move toward full financial isolation of Russian financial institutions and strengthen measures to prevent circumvention of relevant sectoral restrictions.

  • Comprehensive transaction bans on Russian banks. The EU now prohibits all transactions with 22 Russian financial institutions, including the Russian Direct Investment Fund (RDIF).

  • Sanctions of non-Russian financial actors. Two Chinese institutions were added to the sanctions list for facilitating Russian transactions through crypto assets.

  • Extension of software bans in the financial sector. The EU has expanded the prohibition applicable to software to include newly listed items used in banking and financial operations.

  • Expanded transaction ban criteria. Entities outside Russia that use the Central Bank of Russia’s System for Transfer of Financial Messages (SPFS) or similar financial messaging systems are now subject to restrictions, even without additional conditions.

• Extended export controls: The 17th and 18th Sanctions Packages extend export controls to a broader range of industrial and civilian goods with potential military applications.

  • Extension of export bans to industrial and lab equipment. The scope of restricted goods has been extended to include industrial machinery and laboratory equipment with potential dual-use applications.

  • Transit ban via Russia for strategic goods. The list of goods prohibited from transiting Russian territory is extended to include iron and steel structures, processing machinery, diesel tractors, and nonmotorized vehicles.

  • Catch-all clause for export authorization. Exporters must now seek authorization if there is reason to believe that goods may be intended for use in Russia, even indirectly.

• Application of nonpreferential rules of origin: To determine whether goods originate from Russia, companies must now apply EU nonpreferential rules of origin.

• Investor-state dispute settlement (ISDS): The 18th Sanctions Package introduces a new legal safeguard allowing the EU and its member states to refuse recognition and enforcement of ISDS-related awards issued outside the EU in favor of Russian- or Belarusian-designated entities and may seek damages from claimants.

Key takeaways from the Belarus Sanctions Alignment Package: While the initial EU sanctions against Belarus focused primarily on human rights violations and internal repression, as in the 16th sanctions package, the 18th package represents a strategic shift, largely mirroring several key trade, financial and sectoral restrictions applied to Russia:

• Financial restrictions aligned with Russian measures: The Belarus Sanctions Alignment Package introduces full transaction bans on a broader set of financial institutions.

• Extension of export controls to military-relevant goods: The EU mirrored restrictions applied to Russia, including bans on military goods and industrial equipment.

• ISDS: The package includes the same ISDS-related protections as those offered as part of the Russia packages.

Key takeaways from the Hybrid Threats Program update: The updated EU hybrid threats framework (Hybrid Threats Program) builds on the October 2024 sanctions program targeting destabilizing activities by Russia. It reflects a shift toward a more assertive and structured response to foreign interference, disinformation and activities that undermine or threaten democracy. It further complements the ProtectEU initiative launched in April, which adopts a broader internal security strategy aimed at supporting member states and enhancing the EU’s capacity to anticipate, prevent and respond to a wide range of threats — from terrorism and organized crime to cyberattacks and hybrid attacks.

• New designations targeting hybrid actors: Twenty-one individuals and six entities have been listed for activities undermining or threatening democracy or public safety or promoting disinformation within the EU member states.

• Expanded transaction bans on hybrid enablers: The EU targets any tangible asset (e.g., vessels, aircraft, real estate, ports, airports, physical elements of digital and communication networks) and certain credit or financial institutions or crypto asset service providers.

• Broadcasting ban: The EU may prohibit content from designated operators spreading disinformation (even though no entities have yet been listed).

Other general updates

• As a result of the latest Russian sanctions programs, including the Hybrid Threats Program and Belarus sanctions program, there are over 200 new designations of individuals and entities across various sanctions regimes, including those involved in human rights violations, chemical weapons use and supporting the Russian military.

• The EC has updated its sanctions FAQ, clarifying rules around import bans, port access for sanctioned vessels and due diligence obligations for high-priority items.

Read the full detailed overview of the EU's 17th and 18th Sanctions Packages. 

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Hughes Hubbard’s Paris-based EU Economic Sanctions and Export Controls team, part of the firm’s Sanctions, Export Controls & Anti-Money Laundering practice, is well -positioned to assist EU operators in navigating, in a practical and pragmatic way, EU sanctions against Russia and other EU thematic or country-based sanctions programs. Please contact us if you have any questions about the above or any of the prior topics of our client alerts.