The EU’s new sanctions package

Glib Ostapenko

On June 10, 2025, the European Commission, led by President Ursula von der Leyen and High Representative Kaja Kallas, unveiled the 18th package of sanctions targeting Russia’s war machine. These measures strike at the heart of Kremlin financing by focusing on energy revenues, banking operations, and the so-called “shadow fleet” of oil tankers. With ambitions to prompt both immediate disruption and systemic erosion of Russian capabilities, this package must now navigate approval by all 27 EU member states and coordination within the G7 framework, where the oil-price cap is decided.

Lowering the Oil Price Cap: From $60 to $45—and Calls for More

Central to this package is the proposed reduction of the G7 oil-price cap on Russian seaborne crude from $60 to $45 per barrel, a response to market shifts since the cap’s inception in late 2022. EU leaders argue that the original cap, set when oil prices exceeded $100, has since proven insufficient, enabling Moscow to maintain revenue flows that underpin its war effort. According to von der Leyen, reducing the cap aims to “cut this source of revenues”.

Yet Ukrainian officials stress that even $45 remains far above Russia’s pain threshold. President Zelenskyy, Foreign Minister Andriy Sibiha, and analysts argue that a cap of $30–35 would introduce “real pressure” capable of hastening war resolution. The EU package reflects a compromise: more ambitious than the status quo, but cautious enough to balance energy market volatility and alliance cohesion. Whether $45 achieves its intended economic effect depends on strict enforcement and G7 unity.

EU 18th sanctions package — The Eventin, carrying almost 100,000 tonnes of oil, was adrift and ‘unable to manoeuver’ in the Baltic Sea © Handout / Havariekommando/AFP

Shadow Fleet Counteroffensive: Sanctioning Loopholes

Recognizing that the oil cap’s impact has been severely blunted by Russia’s “shadow fleet” of unregulated tankers, the EU is expanding sanctions to 77 more vessels, bringing the total sanctioned fleet beyond 400 ships. These vessels frequently change ownership, turn off transponders, swap flags of convenience, and carry goods through ambiguous third-country hubs.

Data indicate that the shadow fleet now transports 60–70% of all Russian seaborne oil. As many as 343 vessels are identified in Western databases, and some 264 are already subject to sanctions, representing about 77% enforcement coverage. Nevertheless, roughly 79 vessels remain outside the sanction’s net.

The EU’s strategy now also incorporates environmental and safety justifications. Many of the shadow fleet’s ancient tankers pose risks of spills or accidents; the European Parliament and Baltic states have warned that such incidents could be disastrous.

Banking Restrictions: Extending the Squeeze

Financial pressure is the second pillar of the package. The EU proposes to expand its transaction ban from just SWIFT messaging to full financial transactions for 22 additional Russian banks, alongside a targeted ban on institutions in third countries that facilitate sanction circumvention. This broader net finally takes aim at financing networks enabling Russia’s shadow channels.

Notably, the Russian Direct Investment Fund (RDIF) and its subsidiaries are also included. This non-transparent but strategically significant vehicle has financed Russia’s industrial modernization, meaning the EU intends to sever a key ‘grey market’ funding system.

Coordination Challenges: G7 Unity, U.S. Drift, EU Fractures

Enactment of these measures cannot occur solely at the EU level—the oil-price cap requires G7 consensus, and EU leaders are lobbying ahead of the Kananaskis summit (June 15–17). While early indications from the U.S. under the Biden administration were positive, European envoy David O’Sullivan has conceded that coordination has weakened.

Unity is also fragile on the EU side. Slovak Prime Minister Robert Fico has declared he will veto the sanctions unless the bloc provides energy alternatives and financial compensation, warning that reliance on Russian gas, oil, and nuclear fuel makes a phase-out “economic suicide.” Hungary’s long-standing ties to Moscow, coupled with domestic political sensitivities, pose a similar threat to protracted EU solidarity.

To maintain cohesion, Brussels must accelerate energy diversification, coordinate with NATO on Baltic monitoring, and ensure that allies in the G7 actively reinforce, rather than hollow out, the sanctions.

Initial Impact: Gains and Gaps

Early data suggest tangible effects: EU assessments indicate that Russian monthly fossil-fuel revenues have fallen from roughly €12 billion pre-war to €1.8 billion today, highlighting the price cap’s bite. UK research further attributes a €38 billion cumulative revenue decline to shadow-fleet restrictions.

Yet significant loopholes persist. About 20–25% of the shadow fleet continues operations without sanctions, leveraging insurance gaps (with two-thirds under unknown or self-issued policies) and region-specific weak enforcement. Further complications emerge in dense shipping corridors—like the Danish Straits, where nearly 3 shadow vessels per day transit with limited oversight.

Recommendations for Reinforcement

To bolster effectiveness, the EU should:

Push for a deeper price cap—aligning with Ukraine’s €30–35 vision—to further disable Kremlin revenues if enforcement gaps are closed.
Coordinate comprehensive sanction coverage—particularly targeting vessels and banks in countries where significant evasion networks operate.
Close insurance loopholes—by banning Western insurers from shadow-fleet cover and exposing bubble schemes; non-Western insurers of these vessels should face secondary sanctions.
Incentivize unity among reluctant states, offering energy transition funding and legal guarantees to governments like Slovakia and Hungary.

Glib Ostapenko | OSTAPENKO, Political Consulting | Founder, Leading Expert

Mahabahu.com is an Online Magazine with collection of premium Assamese and English articles and posts with cultural base and modern thinking. You can send your articles to editor@mahabahu.com / editor@mahabahoo.com(For Assamese article, Unicode font is necessary) Images from different sources.