Latest EU sanctions target Russian oil and gas revenues

A full “transaction ban” on Nord Stream 1 and 2 was included in the latest – the 18th – package of Russian sanctions introduced by the EU since Russia’s invasion of Ukraine in 2022.

The transaction ban covers “the provision of goods or services” and therefore prevents “the completion, maintenance, operation and any future use of the Nord Stream 1 and 2 pipelines”, according to the Council of Ministers, the body that brings together representatives from the governments of each of the 27 EU member states.

Nord Stream 1 and 2 are a network of undersea pipelines designed to supply gas sourced in Russia to Germany. Nord Stream 1 operated between 2011 and 2022 while Nord Stream 2 was completed in 2021 but has never been put into use. Infrastructure within both Nord Stream 1 and 2 networks was damaged following explosions in September 2022, which investigators have attributed to sabotage.

Sanctions expert Stacy Keen of Pinsent Masons said: “The EU’s ban on transactions related to the Nord Stream 1 and 2 pipelines is more than symbolic – it is a strategic lock on any future reactivation of Russian gas flows to Europe.”

“While both pipelines were damaged and are currently non-operational, the supply of natural gas through those pipelines in the future could generate revenues for Russia, thereby enabling the continuation of its war of aggression against Ukraine. The prohibition is intended to prevent the resumption or the establishment of natural gas supplies through those pipelines,” she said.

Andreas Haak of Pinsent Masons, an expert in foreign trade law sanctions, said: “Given the consequences of the loss of access to cheap Russian gas for the German industry and the economy at large, there was a lot of speculation in Germany about Nord Stream 1 and 2 falling in scope of EU sanctions. Those who welcome the idea have pointed out that the pipelines could provide an opening for peace talks with Russia.”

Keen said that there is a limited exception to the Nord Stream 1 and 2 transaction ban.

“An exception is in place for transactions that are strictly necessary for the urgent prevention or mitigation of an event likely to have a serious and significant impact on human health and safety, maritime shipping or the environment or as a response to natural disasters,” said Keen. “A reporting requirement is in place for those that make use of this exception.”

According to Keen, there are grounds on which an EU member state can grant an authorisation to carry out otherwise prohibited activities in relation to Nord Stream 1 or 2, but those grounds are limited.

The EU’s latest Russian sanctions package features a range of other measures that target Russian oil and gas revenues. For example, the EU – together with the UK – has decided to lower the price cap applicable to crude oil, from $60 per barrel to $47.60 per barrel. The price cap is a measure that prohibits companies in G7 countries from shipping, insuring or otherwise servicing Russian oil sold above the price cap.

The lowered oil price cap of $47.60 per barrel comes into effect in the EU and UK at 23:01 BST on Tuesday 2 September 2025. However, a wind-down period will apply to certain existing contracts – contracts signed before 20 July 2025 compliant with the existing $60 per barrel price cap will be allowed to continue to run up until 23:01 BST on Friday 17 October 2025. The UK is aligning with the EU on the lowered cap.

The EU’s 18^th sanctions package also includes a ban on the import of refined petroleum products produced using Russian crude oil.

Haak said: “With this measure, the EU is closing another loophole. Previously, once refined in a third country, these products were no longer treated as Russian. We expect the European Commission to issue guidance on the implementation of this prohibition, in particular as regards the evidence which should be provided by operators engaged in the import of refined petroleum products.”

A further 105 vessels considered part of Russia’s shadow fleet have also been brought within the scope of sanctions, which means EU port operators will be banned from allowing those vessels to dock. Measures in the package also address Russia’s military industry and financial services – for example, all transactions with an additional 22 Russian financial institutions, including transactions with Russia’s sovereign wealth fund, the Russian Direct Investment Fund (RDIF), as well as its investments, have now been banned.