Sanctions at the Limit of Faith

This article is an attempt to understand what really lies behind the loud formulations of the EU’s 18th sanctions package: a breakthrough in sanctions architecture or just another revision of outdated mechanisms?

The package of sanctions adopted by the European Union against Russia on July 18, 2025, may seem like yet another bureaucratic ritual. Slovakia lifted its veto at the last minute, Brussels bureaucracies stirred with activity, and headlines of leading Western publications once again echoed in unison: “EU ramps up pressure.” All of which would be fine — if there were a truly effective strategy behind these decisions. Yet beneath the formal solemnity of the language, a reasonable question arises: how is this 18th package different from the previous ones? And is it really capable of changing the rules of the game?

The package targets several fronts at once — from oil exports and maritime logistics to banking operations and technological chains. It adds measures against the so-called “shadow fleet,” disconnects 22 more Russian banks, and tightens controls on transactions involving oil products from third countries. But this is far from the first attempt: since 2022, there have already been seventeen such packages, and the Russian economy, contrary to expectations, continues to adapt and develop alternative routes.

The author’s companion lifts a cup of coffee and comments lazily:

— The myth of the magical sanctions lever lives longer than Europe’s trust in its own enforcement tools.

— Still, — the author replies, — let’s take a deeper look. What exactly is new in this package? And where are the chances — and where just the same old tune?

Key Changes: What the 18th Package Introduces

Unlike many previous sanctions waves, the 18th package does not focus on isolated “precision strikes.” On the contrary — it is built around the principle of broad coverage: blocking bypass routes, monitoring the origin of oil products, isolating financial channels, and even attempting to exert pressure on oil refining outside Russian territory.

New Pricing Mechanism: Goodbye $60

One of the central elements of the package is the replacement of the fixed $60 price cap with a dynamic mechanism, where the price of Russian oil is limited to a level 15% below the average market rate. The current reference point is approximately $47.6 per barrel of Urals crude.

The purpose of this innovation is clear: the previous cap was ineffective. Russian oil continued to sell comfortably at $65–70 per barrel, particularly in deals with India and China. The new formula is said to adapt to market volatility and neutralize speculative advantages.

However, the mechanism still relies on actual compliance by G7 countries and maritime regulatory bodies. Which means — the same issues as before: falsified documents, open-sea transshipments, flag manipulation.

The author notes:

— The price is “smart” now, but enforcement is still left to those who can’t even touch the shadow fleet.

The companion smirks:

— Well, just in case, they added another hundred vessels to the blacklist. Pure ritual.

105 Vessels in the “Black Book”

An additional 105 vessels have been added to the so-called “shadow fleet,” suspected of transporting Russian oil in circumvention of sanctions. The total list now exceeds 400 units. These are tankers registered in Panama, Liberia, the Marshall Islands — countries with lenient flag regimes.

The EU is trying not only to ban these vessels from entering European ports but also demanding flag withdrawals by intermediary countries. However, these efforts remain largely declarative, since evidence of participation in sanctions evasion is often based on satellite imagery and indirect data.

The author ironically recalls an old joke:

— Captains now carry, they say, three sets of documents: one for the EU, another for Chinese customs, and the third for the real buyer. A true circus.

Blocking 22 Banks: A Real Strike or Just Noise?

The new list includes 22 Russian financial institutions, including banks previously used as transit channels. Additionally, all operations through the Russian Direct Investment Fund (RDIF) are restricted.

However, it’s worth noting that the key players — Sberbank, VTB, Gazprombank, Rosselkhozbank — were already under sanctions and continue operating via Chinese and Gulf payment corridors.

The impact of these new banking restrictions will likely push more transactions into the crypto space, peer-to-peer channels, and electronic currencies. Russia’s infrastructure has long since adapted to these conditions.

Blind Spot of Sanctions: Refining Outside Russia

Among the innovations noted in the 18th package, one stands out that was rarely formulated directly before: restrictions on importing oil products refined from Russian crude in third countries. This primarily concerns India, China, Turkey, and Malaysia.

Affected most are Indonesian and Indian refineries, as well as Russian companies operating abroad. One key example is the Nayara Energy plant in India, in which Rosneft holds over 49%. Over the past two years, it has been actively refining Russian crude and exporting the resulting gasoline, fuel oil, and diesel fuel to the EU.

But this raises a difficult legal and technical issue: is it possible to prove the origin of the raw material — especially if it’s been mixed with oil from other sources?

So far, the mechanism for determining origin remains declarative. The only technically viable method would be isotopic analysis of the raw material, but this isn’t used — even in cases of military smuggling.

Digital Ruble and Cryptocurrencies: The End of Banking Logic

Arguably, the main challenge to the entire banking section of sanctions lies not in the list of blocked institutions but in the paradigm shift of transactions themselves.

The Move to a Digital Ruble

Starting in spring 2025, the Russian government introduced an accelerated rollout of the digital ruble, making it mandatory for all transactions involving state-owned companies, including Gazprom, Rosneft, and the defense sector. Transactions are carried out through the Central Bank’s platform and secured using a closed-loop digital architecture.

The goal: to bypass SWIFT, Visa, Mastercard, and even domestic commercial banks. Payments are made directly between digital wallets of companies, rendering sanction interception of transactions impossible. Moreover, transactions with a number of countries — including China, Iran, and the UAE — already take place in digital currencies: rubles, dirhams, and yuan.

A New Philosophy: P2P and Crypto Barter

In addition to the digital ruble, the infrastructure for crypto-barter transactions has gained momentum. Licensed hubs for Ethereum and Tether operations are opening in Russia, connected to offshore channels in Asia. In practice, this means a Russian company sells raw materials for stablecoins, then exchanges them for goods — without any banks involved.

Sanctions are killing the 20th century. What we’re witnessing now is the 21st: no SWIFT, no correspondent banks, no traceability. Just blockchain and mutual trust.

How Is the 18th Package Different From the Previous Ones: First Time or More of the Same?

At first glance, the EU’s new measures seem large-scale and innovative. But anyone who’s closely followed the sanctions chronicle since 2022 has reason to be skeptical. We’ve seen so much already: oil embargoes, SWIFT cutoffs, bans on dual-use goods, export controls on electronics, asset freezes. So what’s actually new in the 18th package?

Let’s break it down.

Price Cap: Again? No — Slightly Smarter

The fixed price cap of $60 on Urals crude was introduced at the end of 2022 — and quickly lost value as a tool because Russian companies managed to sell oil above that threshold through affiliated intermediaries, especially in Asia. Deliveries were made at real market prices, but paperwork showed formally “sanctioned” prices.

It was precisely the inefficiency of the earlier cap that led to its complete overhaul in the 18th package. Now it’s “floating” — set at 15% below the market price of Urals. This is an attempt to create a self-adjusting tool that responds to fluctuations.

But without verification of sales data, the mechanism may again become declarative rather than functional. It all comes down to monitoring origin and pricing, not just setting the figure.

Shadow Fleet: As If It’s News

The mention of 105 new vessels added to the blacklist almost elicits an ironic reaction. Back in 2023, The Guardian and other media reported that Russian oil was being shipped en masse by fleets with no AIS trackers, via offshore transfers and under fake flags. This isn’t news — it’s confirmation of long-known practices.

However, for the first time, the EU documents go beyond the abstract phrase “shadow fleet” to list actual vessels tied to technical data: IMO numbers, routes, transfer schemes. According to Consilium, this is a major expansion of the EU’s sanctions legal framework. It provides grounds for port bans, insurance denial, and flag revocations.

So the real difference lies not in the substance but in the formalization of the tool — turning a journalistic term into a legal one.

Banks: Duplication or Deepening?

Previous sanctions packages targeted:

• Sberbank, VTB, VEB

• Alfa Bank, Otkritie, Sovcombank

• Individual fintech structures

Yet many intermediaries, especially in agriculture and logistics, continued to operate. The 18th package includes, for the first time, a secondary tier: regional and niche banks previously under the radar — and entities servicing gray export schemes.

Additionally, it blocks the Russian Direct Investment Fund (RDIF), which has often acted as a financial intermediary in Asian investments, particularly with the UAE and China. This is what distinguishes the 18th package: it doesn’t just repeat the list of major players — it “cleans out the basement” of the banking system.

Still, it all hinges on classic banking logic. While Russia has moved far ahead — into a digital and crypto-based financial architecture.

Refining Outside Russia: A Truly New Tool

Here, analysts agree: the attempt to sanction the refining of Russian crude at foreign refineries (in India, China, or Turkey, for instance) is indeed a new tool — previously unused due to the difficulty of proving origin. For the first time, there is a direct reference to the refinery itself rather than the host country, expanding the EU’s reach even to “external territory.”

Previously, oil products made from Russian crude passed as “neutral” — and were easily shipped to the EU. Now, the sanctions invoke the principle of origin by raw material, not by geography of processing.

But the key challenge remains: how to verify this? Even with Indian plants, it’s legally vulnerable — no exporter will list “Russian origin,” especially if the oil is “blended.”

Russia’s Adaptation: How Sanctions Are Circumvented in Practice

If the 18th sanctions package is a map of new restrictions, then Russia’s reaction is an atlas of bypass routes. Over the past two years, Moscow hasn’t just learned to neutralize the blow — it has institutionalized sanctions evasion: through its own financial tools, logistical schemes, diplomatic leverage, and digital platforms. This section is an attempt to systematize the full Russian response to the West’s sanctions architecture.

Digital Ruble: State Capitalism Without Intermediaries

As noted earlier, the launch of the digital ruble (CBDC) in mid-2024 became the largest structural reform in Russia’s financial sector. By 2025, the digital ruble had become mandatory for state settlements in the energy, defense, and foreign trade sectors with “unfriendly” countries.

In effect, this is a closed-loop digital platform where Russia’s Central Bank acts not just as regulator, but as sole operator and certifying authority. This eliminates dependence on SWIFT, reporting commercial banks, and even Visa/Mastercard.

Payments become untraceable by Western financial intelligence, as they run through internal networks (under the guise of “state transactions”), and deals are recorded in a closed ledger.

Flagless Oil: Next-Gen Shadow Logistics

According to reports, by 2025 the volume of Russia’s “shadow fleet” exceeded 800 vessels, including oil tankers, offshore transshipment platforms, and container carriers. Most sail under the flags of Liberia, Panama, Cambodia, Tuvalu, and the Marshall Islands.

The classic circumvention scheme:

1. Loading of Urals crude at Novorossiysk, Primorsk, or Ust-Luga ports.

2. Transfer at sea to another vessel (STS — ship-to-ship).

3. Change of flag and falsified route.

4. Delivery to ports in India, China, UAE, or Malaysia — rebranded as “mixed-origin oil.”

Most vessels do not use AIS tracking, making routes unverifiable in real time. Moreover, dozens of brokers operate on the black market, ready to issue “fictitious declarations of origin.”

Indian Reverse Flow: Refining at Nayara

One of the most important logistical hubs is the Indonesian and Indian refinery network, especially Nayara Energy (49.1% owned by Rosneft). Hundreds of thousands of tons of Urals crude are refined into diesel and gasoline, which are then exported:

• to Africa,

• to Asia,

• and to the European Union — under the label “Indian oil products.”

Products not covered by embargo are certified in Singapore or through the Rotterdam exchange. In this way, Russia transforms from a raw exporter into a hidden exporter of refined goods.

Crypto Barter and Offshore Channels

Finally, stablecoins (USDT, USDC), private crypto channels, and barter schemes via offshore jurisdictions are actively used to bypass banking oversight:

• Exchanges in Dubai, Hong Kong, and Bishkek provide instant swaps between rubles, USDT, and goods.

• Russian companies enter contracts not for currency, but for “in-kind obligations” — for example, delivering oil in exchange for chips, machine tools, or spare parts.

Many “deals” bypass the banking system entirely and are arranged through intermediaries in Kazakhstan, Kyrgyzstan, and Vietnam.

Why Now? Political Dynamics Within the EU

Slovakia Lifts Its Veto: Deal or Blackmail?

The adoption of the 18th package could have once again stalled — and might not have happened at all — had it not been for Slovakia’s sudden reversal. The government of Robert Fico, traditionally known for its pro-Russian rhetoric and calls for “smart sanctions instead of mass sanctions,” initially blocked the vote in the EU Council. But on July 18, 2025, the veto vanished.

What happened?

The veto was lifted after closed-door consultations with representatives from the European Commission and Germany. EU insiders suggest that Slovakia was offered leniency in the distribution of economic recovery funds and — unofficially — flexibility on energy contracts (particularly with MOL and ČEZ).

The author quips:

— Sanctions are sanctions, but gas is on schedule.

The companion replies:

— The “you give us sanctions, we give you transport” principle worked again.

Germany: Rhetorical Shift

Germany, long torn between pragmatism and pressure from allies, eventually supported the 18th package. This followed public statements by German officials (e.g., Jürgen Hardt) emphasizing the need to tighten sanctions and stating that “Putin is not interested in peace.”

Germany’s support is explained by several factors:

• Growing pressure from Ukraine.

• Scandals involving sanctions evasion via Siemens subsidiaries in the UAE.

• Pressure from opposition parties and civil society.

France: Cautious Support

France traditionally takes a “sanctions with caution” approach — tough, but balanced. In this package, it supported the idea of a dynamic oil price cap. Regarding the ban on oil products from third countries (e.g., Indian refining), France did not publicly oppose the measures but also did not lead the charge — leaving that to countries like Poland and Lithuania.

Hungary: Ritual Grumbling

Hungary maintained its course of constructive dissent — not blocking, but warning that the sanctions package could cause “serious economic harm.” While there were no outright statements about “crossing the line of rationality,” the official tone was clear — without energy guarantees, regional vetoes would remain a threat.

The companion comments:

— Orbán once again sold his protest for extended fertilizer subsidies. Business as usual.

Poland and Lithuania: As Hardline as Ever

These two countries have long been the main engines behind sanction pressure. Their representatives consistently demanded:

• Full SWIFT disconnection of all Russian banks,

• Bans on any offshore settlement routes,

• Inclusion of logistics firms from Kazakhstan and Kyrgyzstan in sanction lists.

While not all proposals passed, it was the pressure from Poland and Lithuania that enabled the sanctions to extend to oil refining in third countries — a unique step previously considered unfeasible.

Compromise balance

Final Assessment: What Will Actually Change?

The 18th sanctions package is arguably the most technically developed, extensive, and institutionally calibrated set of restrictions since the beginning of Russia’s invasion of Ukraine. It expands the scope, introduces self-correcting mechanisms (price cap), engages third-country supply chains, and abandons diplomatic pleasantries toward “neutral intermediaries.” But does this mean it will actually work?

What Might Actually Work

1. Shadow Fleet Systematization

For the first time, the EU created a formal legal list of vessels involved in sanctions evasion, enabling denial of insurance, port entry, and flag withdrawal. If the G7 joins this list, logistical schemes could face real disruption.

2. Revenue Drop from Floating Price Cap

If the “15% below market” formula is properly implemented — and violators fully blocked — Russian exporters could face real currency shortfalls, especially if sanctions reach pseudo-traders in Singapore and Dubai.

3. Sanctions on Oil Refining

For the first time, the EU acknowledged that oil is not just Urals crude — but also what’s made from it, regardless of where it’s processed. If enforceable, this could cut back on gray exports via India and the Balkans.

4. Blocking the Second Tier of Banks

Removing previously “invisible” banks and the RDIF from the system reduces fallback options for semi-official deals.

What Likely Won’t Work

1. Price Cap Without Verification

As with the first cap, without tools to verify deal values and oil routes, the mechanism becomes merely declarative. Contracts are rewritten, documents forged, paper trails wiped clean.

2. Proving Origin of Oil Products

None of the sanctions packages offer a technical method for proving oil origin after refining. Until the EU introduces lab-based identification or a digital registry, sanctions on Indian and Chinese refineries remain symbolic.

3. SWIFT Blocking — Too Late

Russia has already adapted: digital ruble, crypto barter, direct settlements in yuan and dirham have made SWIFT a relic.

The Kremlin’s Strategy: Institutionalized Evasion

An analysis of Russia’s behavior shows: evading sanctions is no longer improvisation — it is state policy.

• The Central Bank acts as issuer of digital currency and clearing center.

• The Energy Ministry coordinates fleets and transshipment schemes.

• Rosneft and Gazprom Neft operate as transnational corporations with hybrid logistics.

• Intermediaries — from India to Malaysia — are integrated into the diversification strategy.

In essence, the EU is no longer confronting isolated tricks — but a new model of sovereign trade beyond dollar dominance.

Strategic Conclusion of the Author

If the European Union wants to match Russia’s pace of adaptation, it must move from paperwork and declarations to technological sanctions thinking. That means:

• Oil Origin Verification — deploying isotopic analysis of oil products, similar to methods used in nuclear non-proliferation. Such technologies already exist in the EU but are not used in sanctions compliance.

• Digital Tracking — building a unified European oil transport registry that integrates AIS, satellite imagery, insurance declarations, and contracts. Only such a database can track the shadow fleet in real-time.

• Crypto Counterintelligence — developing capabilities to monitor crypto barter schemes, in cooperation with blockchain analysis firms (like Chainalysis, Elliptic) and FATF initiatives. P2P markets and offshore havens are currently outside the sanction zone.

The eighteenth package is not a turning point — but a vital signal: the EU has started to learn. It is acknowledging its own failures, reassessing vulnerabilities, and attempting to move from slogans to algorithms. Yet while Russia builds an alternative reality, the EU is still correcting past fantasies. This race isn’t about speed — it’s about depth.

Sources Used

1. The Guardian — EU sanctions: live updates, 18 July 2025

2. Bloomberg — EU Backs Revised Russia Oil Price Cap and New Sanctions, 18 July 2025

3. Financial Times — EU targets Russian shadow fleet and oil revenue in sanctions package, 18 July 2025

4. Reuters — EU’s new Russia sanctions aim at more effective oil price cap, 18 July 2025

5. Associated Press — EU sanctions target Russia’s shadow fleet, 18 July 2025

6. Consilium.europa.eu — EU adopts 18th package of economic and individual measures against Russia, 18 July 2025

7. The Washington Post — EU adopts 18th round of sanctions targeting Russian energy and banks, 18 July 2025

8. The Guardian — The “dark fleet” of tankers shipping Russian oil in the shadows, 19 August 2023

9. Reuters — German minister: more sanctions against Russia needed, 25 May 2025

10. Reuters — Hungary and Slovakia block Russian sanctions package, Budapest says, 23 June 2025