EU’s 18th sanctions package targets flag registry and 'shadow fleet', cuts oil price cap

The new measures expand the list of ’shadow’ vessels under sanctions, lower the oil price cap, and – for the first time – target a national flag registry.

EU foreign policy chief Kaja Kallas described the package as one of the bloc’s “strongest” to date in a post on X on 18 July. “We are striking at the heart of Russia’s war machine,” added European Commission President Ursula von der Leyen.

Riviera reported this week that Slovakia, which had initially blocked the sanctions package, was seeking exemptions from the EU’s proposal to halt Russian gas flows by 2028. Approval of the sanctions required unanimous consent from all member states.

However, Slovak Prime Minister Robert Fico stated on 17 July that “it would be counterproductive to continue blocking” the sanctions. He added Slovakia had received guarantees from the EU pertaining to gas prices and supply. 

Key sanctions measures

Among the headline measures is a reduction in the oil price cap applied to Russian crude exports. The EU announced that the price cap will be lowered from US$60 to US$47.6 per barrel to align it with current global oil prices. Additionally, it is introducing "an automatic, dynamic mechanism to adjust the oil price cap as needed, ensuring the cap remains effective."

Another key measure is the first-ever designation of a national flag registry, along with the largest Rosneft-operated refinery in India. The EU later stated that it is targeting the private operator of an international flag registry – without providing further details – as well as the captain of a shadow fleet vessel.

Furthermore, the EU is introducing an import ban on refined petroleum products made from Russian crude oil and imported from any third country – except Canada, Norway, Switzerland, the United Kingdom, and the United States – thereby "preventing Russia’s crude oil from reaching the EU market through the back-door."

The sanctions package also significantly expands the list of blacklisted shadow fleet vessels. The EU will now sanction 105 additional ships, up from 77 initially proposed in June. Brussels has already designated 342 vessels on its sanctions list.

Kaja Kallas noted the package also targets enablers of sanctioned shipping and further restricts Russian banks’ access to funding.

According to a recent report by Howe Robinson Partners, around 20% of the global crude tanker fleet is now effectively excluded from the mainstream market, when factoring in sanctions from OFAC, the EU and the UK. This figure excludes shuttle tankers, asphalt/bitumen carriers, and FPSO/FSO units.

The latest sanctions also impose a transaction ban on the Nord Stream 1 and 2 pipelines.

“We are putting more pressure on Russia’s military industry, Chinese banks that enable sanctions evasion, and blocking tech exports used in drones,” said Ms Kallas.

Sanctioned LNG carriers identified at Arctic LNG 2

Meanwhile, sanctioned LNG carriers have been observed in transit by shipping intelligence platforms. Reuters, citing data from Kpler and LSEG, reported that Voskhod arrived at Russia’s Arctic LNG 2 facility on 16 July. Voskhod is among the vessels whose owners and operators were sanctioned by the US in October 2024.

This marks the second known call at Arctic LNG 2 this year, following Iris, which reportedly loaded a cargo at the facility on 26 June.

The Arctic LNG 2 project, 60% owned by Russia’s Novatek, was envisioned as a major LNG export hub with a planned capacity of 19.8M tonnes per year. However, sanctions have significantly disrupted its supply chain and shipping operations.