On 18 July 2025, the EU formally adopted its 18th sanctions package against Russia, following intense negotiations and Slovakia’s decision to lift its veto. The package was described by the EU as one of the toughest to date, with a clear focus on undermining Russia’s ability to finance its war in Ukraine.
Key measures include:
- Lowering the oil price cap to around $47.6 per barrel, with a dynamic adjustment mechanism.
- A new ban on imports of refined oil products made from Russian crude in third-country facilities.
- A transaction ban on 22 additional Russian banks, including those involved in Nord Stream-related activities and the Russian Direct Investment Fund (RDIF).
- Blacklisting of approximately 105 more vessels suspected to be part of the so-called “shadow fleet”, bringing the total to over 400.
- Tightened export restrictions on dual-use and military-relevant technology.
- Sanctions on third-country actors facilitating sanctions circumvention.
- And new measures targeting LNG (liquefied natural gas) to limit Russia’s long-term energy revenue potential.
The overarching goal is to close known loopholes, improve enforcement of existing measures, and systematically erode Russia’s capacity to sustain a wartime economy over the longer term.
Why do new sanctions keep coming?
Sanctions are not a one-off action; they are part of a dynamic power struggle. As Russia adapts and circumvents existing measures, the EU and its allies must continuously tighten and refine their tools. It’s an economic arms race: the moment one loophole is closed, new ones are discovered.
The latest package is primarily about improving enforcement. Many of the earlier sanctions’ impacts have been weakened over time, through lack of oversight, third-country intermediaries, and deliberate circumvention and adaptation strategies by Russia. New packages often focus less on inventing new bans and more on ensuring that existing ones are truly effective.
In addition:
- Geopolitical factors drive new actions. For example, it is unclear how long the U.S. might keep up its engagement, so the EU seeks to step up.
- New evidence comes to light, such as new actors, trade routes, or financial tools used for evasion.
- Sanctions also serve a symbolic and political role, reaffirming over time support for Ukraine and upholding EU unity.
Are the current sanctions effective?
Sanctions have had a substantial impact in several areas. Imports of military-grade and dual-use technology from Western countries have dropped sharply. However, Russia has partially substituted these with imports from China, smuggling, and domestic production efforts.
Energy prices remain critical: low oil prices strain Russia’s budget, while high prices have recently given the Kremlin more room to maneuver.
In short, the sanctions are working, but Russia is not paralyzed. Their impact depends on:
- The consistency of enforcement.
- The speed and ingenuity of Russia’s countermeasures.
How is Russia adapting?
Russia is adapting strategically across several dimensions:
- Imports: Key technologies previously sourced from the West are now imported from China or acquired via smuggling networks and parallel imports, with help from countries like Iran.
- Exports: Energy flows have been redirected away from the EU and toward countries like China, India, and Turkey.
- Domestic prioritization: The economy is increasingly centered on war production, with substantial reallocation of resources to the military sector.
- Shadow fleet: Russia uses old, anonymously-owned tankers with flags of convenience to bypass the price cap avoiding Western insurance and oversight.
- Alternative payment systems: Companies are using gold, cryptocurrencies, netting arrangements, and barter trade to circumvent the lack of foreign currency access.
- National Wealth Fund: The state is increasingly relying on this sovereign fund to cover wartime deficits, but the Fund, which was originally meant for pensions and generally smoothing out over time energy revenues, is rapidly depleting, raising questions about long-term economic sustainability.
What tools does the EU have left?
Within the sanctions framework:
- Stronger enforcement is possible, especially targeting third-country firms and financial systems that facilitate Russian circumvention (this is the much-discussed extraterritoriality of sanction measures).
- More aggressive export controls on energy, finance, and high-tech goods.
Beyond sanctions:
- Financial and military aid to Ukraine—arguably more crucial than sanctions themselves. Winning a war is about relative strength. Sanctions weaken Russia’s ability to wage war, but support for Ukraine directly strengthens its resilience.
- Diplomatic engagement to isolate Russia internationally and pressure supportive states.
- Cybersecurity and information campaigns to counter hybrid threats and disinformation.
How well is the EU adapting to Russian countermeasures?
The EU has improved over time, but is still more reactive than proactive, mainly due to the requirement for unanimity, which slows decisions.
That said, progress includes:
- Better monitoring and vessel blacklisting,
- Closer coordination with G7 partners and Asian allies,
- More willingness to pursue extraterritorial tools akin to the U.S. approach.
To truly outmaneuver Russia, the EU needs both technical capacity and political cohesion, both of which are being strengthened, but still have room to grow.
How long can Russia hold out?
Russia’s economy has proven more resilient than many expected, but at a high cost:
- Incidental high energy prices have propped up state finances.
- Military production has surged, but at the expense of the civilian economy.
- The National Wealth Fund is shrinking, and Russia faces growing challenges in technology access, inflation, and labor shortages.
Whether Russia can sustain its war economy depends on:
- How long will energy prices stay elevated.
- How long is the state willing to prioritize war over social stability
In the short term, Russia is holding up, but time is not on its side.
How important is the EU to Russia?
The EU has historically been Russia’s most important trade partner, especially for energy exports.
- Before the war, about half of Russia’s oil exports and three-quarters of its gas went to EU countries.
- Today, flows have shifted toward China, India, and Turkey, but the EU remains critical, directly or indirectly, because:
- Many goods and technologies needed by Russia still originate in or transit through Europe.
- Financial and professional services, even when intermediated, often tie back to Western institutions.
So while Russia trades with others on the surface, EU connections still matter.
Which EU countries are still buying Russian oil and gas?
Despite the general EU embargo, some exemptions remain:
- Oil: Hungary, Slovakia, and the Czech Republic still import pipeline crude via the Druzhba system due to their landlocked geography and infrastructure limits.
- Gas: Hungary, Austria, and Slovakia still receive pipeline gas directly from Russia.
- LNG: Countries like Germany continue to import Russian liquefied natural gas, although the EU is working to phase this out over time.
To learn more about Western sanctions and Russia’s countermeasures, visit the Sanctions Timeline.
For details on sanctions imposed on Russia and their effects, see the Evidence Base section of the sanctions portal.
