The European Union introduced its 18th sanctions package against Russia in 2025. The new measures focus on reducing Moscow’s oil income and tightening financial and shipping controls amid the ongoing conflict in Ukraine. The sanctions also address Russia’s use of indirect methods to bypass existing restrictions. This action follows stalled collective efforts at the G7 level and reflects the EU’s independent approach to curbing Russia’s war funding.
New Price Cap on Russian Oil
The EU imposed a fresh price ceiling on Russian crude oil. This cap is set 15% below the average market price, currently near $47.60 per barrel. It replaces the earlier $60 limit introduced by the G7 in 2022. The goal is to reduce Russia’s energy earnings without disturbing global supply. The cap applies from 3 September with a 90-day transition for existing contracts. Oil bought above this limit cannot be shipped, insured, or reinsured by EU firms.
Phasing Out Russian Petroleum Product Imports
The EU will stop importing petroleum products derived from Russian oil after a six-month grace period. This ban excludes products from Norway, Britain, the US, Canada, and Switzerland. The Czech Republic’s exemption from the seaborne Russian oil ban has ended, as it now sources oil from elsewhere. The sanctions also target India’s Nayara refinery, partly owned by Russia’s Rosneft, restricting its operations within the EU framework.
Crackdown on Shadow Fleet and Shipping
To disrupt Russia’s use of ageing tankers and ship-to-ship transfers, the EU banned 105 additional vessels from its ports and waters. These methods often mask the origin of Russian oil. Over 400 ships are now sanctioned. The EU blacklisted a private operator managing an international flag registry and an entity in Russia’s liquefied natural gas sector, aiming to tighten controls on maritime activities.
Nord Stream Pipeline and Financial Sector Measures
The EU banned all transactions related to the Nord Stream pipelines under the Baltic Sea. This includes goods and services provision. Financial sanctions were strengthened with a blanket ban on dealings with Russian banks and financial institutions, many already excluded from SWIFT. Russia’s sovereign wealth fund, the Russian Direct Investment Fund, is also targeted. The EU lowered thresholds for penalising entities aiding Russia’s sanctions evasion.
Export Controls and Blacklist Expansion
The bloc restricted exports of specific chemicals, plastics, and machinery to Russia. Twenty-six new entities were added to the sanctions list for evading restrictions. These include companies based in China, Hong Kong, and Turkey. The expanded blacklist aims to close loopholes in the sanctions regime and prevent indirect support to Russia’s war efforts.
Diplomatic Challenges and India’s Response
Slovakia and Malta initially delayed sanction approval. Slovakia lifted its veto after EU assurances on mitigating losses from the planned 2028 Russian gas import ban. India criticised the EU’s unilateral sanctions, calling them double standards in energy trade. India’s Ministry of External Affairs reaffirmed its commitment to legal obligations and energy security. The sanctions affect Nayara Energy Ltd, a major Indian refinery partly owned by Russian firm Rosneft, which operates a large refinery and fuel network across India.
Questions for UPSC:
- Critically discuss the impact of economic sanctions on international conflict resolution and global trade dynamics.
- Analyse the role of energy security in shaping foreign policy decisions of emerging economies like India and the European Union.
- Examine the challenges of enforcing multilateral sanctions in a globalised financial system and how states attempt to circumvent them.
- Estimate the geopolitical consequences of restricting critical infrastructure projects such as the Nord Stream pipelines on regional stability and energy markets.
