Burn After Reading (Part #2): The 18th EU Sanctions Package & UK Action on Russia’s Shadow Fleet

On 18 July 2025, the European Union adopted its 18th package of sanctions on Russia, in coordination with sweeping United Kingdom measures targeting the Kremlin’s shadow fleet. These actions aim to cripple one of Russia’s few sustainable revenue streams—oil exports—and to curtail sanctions evasion through underhand maritime tactics. Here we provide an analysis of the contents, enforcement mechanisms, projected impacts on hydrocarbon sales, and the likely evasive responses the West's adversaries may resort to.

Key Measures in the 18th EU Sanctions Package

• Crude Oil Price Cap Lowered: The G7 price cap on Russian crude was reduced from US $60 to US $47.6 per barrel—a dynamic cap automatically adjusted every six months, targeting sales above 15% below global market price.

  
  

• Ban on Refined Petroleum Products via Third Countries: The new regulation prohibits imports into the EU of refined goods made from Russian crude through non-EU refineries.

  
  

• Shadow Fleet Crackdown: An additional 105 vessels were blacklisted—bringing the EU’s list to approximately 444 sanctioned tankers associated with the “shadow fleet”. These vessels are barred from EU ports and services.

  
  

• Broader Sectoral Measures: Targeting Nord Stream-related transactions, expanding export controls on dual‑use goods, and imposing a transaction ban on Russia‑linked financial institutions.

UK’s Enhanced Measures Against the Shadow Fleet

• Targeting 135 Shadow-Fleet Tankers: On 21 July 2025, the UK imposed sanctions on 135 additional vessels, and two key entities: Intershipping Services LLC (Gabon‑flag registration agents) and Litasco Middle East DMCC, linked to oil major Lukoil. These companies facilitated up to US $10 billion annually in shadow-fleet shipments.

  
  

• Insurer Disabled Ship Checks: Since October 2024, UK authorities have challenged 343 suspected vessels—about 40 per month—as they transit through the English Channel, demanding proof of valid insurance. One tanker (“Ksena”) was later sanctioned for failing compliance.

Together, EU and UK actions now cover around 264–344 of roughly 343 known shadow fleet tankers, suggesting ~77% are now targeted by sanctions.

How These Measures Work in Tandem

• External Market Control: The oil price cap limits revenues even where crude continues to flow. The EU’s ban on refined products closes loopholes via third-country partners.

  
  

• Maritime Enforcement: Sanctioning vessels and their owners increases the reputational and operational cost of engaging in evasion. Intercepting ships at choke points like the English Channel makes maritime insurance and certification harder.

  
  

• Financial Disruption: Targeting intermediary entities and blocking access to international finance and Western insurance undermines the shadow fleet’s commercial viability.

Projected Impact on Russian Hydrocarbon Sales

• Revenue Declines: Russia’s hydrocarbon income has already declined by over one-third since 2022.

  
  

• Volume Reductions: The Kyiv School of Economics / CREA (Centre for Research on Energy and Clean Air) reports that in April 2025, roughly 692,000 barrels/day (bpd) of crude and 245,000 bpd refined products were shipped on uninsured vessels. Since UK sanctions, sanctioned vessels have reduced crude deliveries by ≈29%, equating to roughly 1.1 million tonnes monthly—~£426 million per month in revenue lost.

  
  

• Estimated Future Decline: With further EU bans on refined product routes, and tighter insurance enforcement, Russian exports via shadow fleet could shrink by another 20–30% in coming months—amounting to a loss of $2–4 billion/month in revenue, depending on market prices and compliance.

Global Russian export volumes may fall below 4–5 million barrels per day by late 2025, down from pre-war levels of 7 million bpd.

Sanctions Evasion Tactics

Russia’s evasion toolkit continues to expand:

• AIS Manipulation & Vessel Identity Laundering: Ships spoof or fake identifiers, switch IMO numbers, owners and flags—often shifting to flags of convenience like Gabon, Cameroon, Liberia or Comoros.

  
  

• Ship-to‑Ship Transshipment: Transfers of crude in international waters—especially off Kaliningrad and in the Mediterranean—then discharges via “clean” tankers.

  
  

• Shell Companies & Intermediary Routes: Using third-country entities in the UAE, Hong Kong, Kazakhstan or China to obfuscate origin and launder transactions.

  
  

• Transshipment Via Third Countries: Russia routes oil shipments through countries that buy Russian crude, refine it, and resell it without marking it as Russian—now partly addressed by the EU refined products ban.

Likely Future Scenarios and Limitations

• Partial Disruption: Shadow fleet sanctions will disrupt sizable volumes, especially to EU-bound transactions—but Russia can still export to India and China, which do not enforce Western restrictions.

  
  

• Revenue Loss vs Volume: Greater revenue pressure stems from price caps—even if volume remains—because global buyers may still pay above cap prices when enforcement is lax.

  
  

• Compliance Loopholes: Without US adoption of the price cap into law, maritime insurers and dollar-clearing systems remain avenues for evasion.

  
  

• Environmental and Safety Hazards: Many shadow vessels are aging, uninsured, and unsafe—highlighting risks of ecological disasters if enforcement fails.

Conclusions

The 18th EU sanctions package, together with UK’s intensified measures, represent a coordinated escalation aimed specifically at crippling Russia’s shadow fleet and oil revenues. By lowering price caps, blacklisting hundreds of vessels, and blocking intermediary companies, these policies severely raise the cost of sanctions evasion.

While illicit trade will continue—particularly toward non‑Western markets—the combined effect is likely to shave off $2–4 billion per month from Russian oil revenues in the coming months and reduce export volumes by 20–30%. The ultimate efficacy hinges on enforcement rigour, Western coordination (especially US alignment), and Russia’s ability to innovate new evasion paths.

In the grand strategy of economic attrition, these measures may mark one of the most consequential outcomes yet of a shadow war fought over tankers, registers, and price caps.