EU approves 18th Russia sanctions package targeting banks and oil

The European Union agreed Friday to impose new sanctions on Russia, targeting 22 banks and implementing a dynamic oil price cap mechanism as part of efforts to pressure Moscow over its war in Ukraine.

EU ambassadors in Brussels endorsed the measures, which ban transactions with Russian banks including the Russian Direct Investment Fund and prohibit use of the Nord Stream pipelines. The sanctions mark the 18th package since Russia’s February 2022 invasion of Ukraine.

The EU will replace its fixed $60 per barrel oil price cap with a dynamic system that remains 15% below average market prices, starting at $47.6 per barrel with automatic six-monthly adjustments.

Shadow fleet restrictions expanded

The package adds 105 vessels to the “shadow fleet” blacklist, bringing the total to over 400 tankers denied access to EU ports and services. These aging vessels help Russia circumvent existing price controls.

In a significant policy shift, the EU will ban imports of petroleum products made from Russian crude and relabelled for European markets, primarily from India and Turkey. The restrictions also target 11 companies accused of enabling circumvention, including four in mainland China and three in Hong Kong.

“We are striking at the heart of Russia’s war machine,” European Commission President Ursula von der Leyen said. “The pressure is on. It will stay on until Putin ends this war.”

High Representative Kaja Kallas described the package as one of the “strongest” to date.

Slovak veto lifted after concessions

The breakthrough followed Slovakia’s decision to abandon its veto, which had blocked approval for weeks. Bratislava’s opposition centred on proposed EU legislation to phase out Russian fossil fuels by end-2027, unveiled in May with draft laws presented in June.

Slovak Prime Minister Robert Fico had demanded financial compensation worth €16-20 billion, citing potential Gazprom lawsuits over contract termination. The gas monopoly’s agreement with Slovakia runs until 2034.

German Chancellor Friedrich Merz and Polish Prime Minister Donald Tusk intervened to resolve the impasse. Von der Leyen sent Fico a letter Tuesday offering reassurances about implementation, including possible state aid and EU funds to “compensate negative impacts for households and industry.”

Coalition rejection prompts continued resistance

Fico rejected von der Leyen’s proposals after coalition partners deemed them insufficient. “Their response is that the Commission’s guarantees to Slovakia are insufficient – some even described them as NOTHING,” he said, posting the confidential letter on social media.

Despite lifting his sanctions veto Thursday, Fico vowed continued opposition to what he termed the “ideologically and obsessively anti-Russian” phase-out.

“At this point, it would be counterproductive to continue blocking the 18th sanctions package,” Fico said. “All options have been exhausted for now, and remaining in our blocking position would already endanger our interests.”

US position diverges on oil cap

The United States has not supported the downward revision of the oil price cap, despite previously championing the mechanism at G7 level. The White House refused to endorse the lower cap, leaving other G7 allies to proceed independently.

Brussels considered British participation fundamental due to its dominant position in maritime insurance services.

The sanctions announcement comes as US President Donald Trump has hardened rhetoric against Vladimir Putin, pledging lethal aid to Ukraine and “severe tariffs” on Russia.

(With information from Euronews)