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In August, Bracewell discussed the evolving impact of UK and EU sanctions on corporations in the energy and infrastructure sectors. In a significant escalation, in October, the UK, US and EU changed the landscape again by imposing a new set of more expansive Russia-related sanctions. These sanctions packages represent the strongest measures taken to date by each of the authorities aimed at increasing pressure on Russia to end the war in Ukraine. Below, we set out the key changes made with respect to each of the sanctions regimes, the effects of those changes, and the resultant increased risk of transacting with any players with ties to the Russian energy sector. In short, these measures represent a significant escalation in pressure and a concomitant significant escalation in risk; while the risk is real, it is also manageable with the right steps.
UK Strikes First, Sanctioning Two of Russia's Largest Oil Companies
On October 15, 2025, the UK Office of Financial Sanctions Implementation (OFSI) issued sanctions against Open Joint Stock Company Rosneft Oil Company (Rosneft) and Lukoil OAO (Lukoil), two of Russia's largest oil companies. "Russian oil is off the market," Chancellor Rachel Reeves said of the UK's measures aimed at stifling Russia's energy revenues, which include banning imports of oil products refined in third countries from Russian-origin crude oil. OFSI also designated 51 shadow fleet vessels, 35 entities and 5 individuals, with several entities having transport sanctions imposed, including Rosneft and Lukoil. This means that any ship or aircrafts associated with the sanctioned entities or Russia are prohibited from entering a UK port/overflying the UK.
Concurrent with these sanctions, OFSI issued general licenses to allow for a wind down period expiring November 28, 2025, for any transactions involving Rosneft and Lukoil. This includes closing out any positions and any reasonably necessary activity to do so. OFSI have also given exceptions, through a separate license, to two German subsidiaries of Rosneft (currently under German trusteeship), which allow the continuation of business on existing contractual obligations, commencing of new contractual obligations and processing of any necessary payments.
US Joins UK, Targets Lukoil and Rosneft
Executive Order (E.O.) 14024, "Blocking Property With Respect To Specified Harmful Foreign Activities of the Government of the Russian Federation," empowers the Treasury Department's Office of Foreign Asset Controls (OFAC) to impose sanctions against individuals and entities furthering specified harmful foreign activities of Russia and against certain sectors of the Russian economy. Initially, sanctions were directed at Russia's technology and defense sectors. In January 2025, OFAC extended these sanctions to any person to operate or have operated in Russia's energy sector and imposed sanctions on Gazprom Neft and Surgutneftegas (Russia's third and fourth largest oil producers and exporters respectively) and their subsidiaries, a network of traders of Russian oil linked to the Russian government and more than 30 Russian oilfield service providers.
On October 22, the Trump administration intensified the sanctions on Russia's energy sector by naming Rosneft, Lukoil and 34 of their subsidiaries (listed as Annex 1) as Specially Designated Nationals (SDNs). Such designation imposes blocking sanctions on these entities and all entities owned 50 percent or more — whether directly or indirectly — by the SDN. Blocking sanctions immediately freeze the entity's assets or other property and prohibit all transactions by US persons, within the United States, or involving US dollars that involve any property or interests in property of blocked entities. E.O. 14024 also prohibits so-called facilitation, the making of any contribution or provision of funds, goods, or services by, to, or for the benefit of any blocked person. Together, the breadth of impacted parties and breadth of conduct captured mean that these blocking sanctions reach far beyond Russia.
The US sanctions represent the first full blocking sanctions against Russia during the second Trump administration and, according to Treasury, are a "result of Russia's lack of serious commitment to a peace process to end the war in Ukraine"
OFAC has also issued four new and amended general licenses :
- GL 124A authorizes certain transactions related to the Caspian Pipeline Consortium or Tengizchevroil projects;
- GL 126 authorizes transactions that are "ordinarily incident and necessary to the wind down of any transaction involving" Rosneft, Lukoil, or any entity owned 50 percent or more by Rosneft of Lukoil until November 21, 2025;
- GL127 authorizes transactions "that are ordinarily incident and necessary to the divestment or transfer, or the facilitation of the divestment or transfer, of debt or equity issued or guaranteed by [Rosneft, Lukoil, or any entity owned 50 percent or more by Rosneft of Lukoil] to a non-US person" until November 21, 2025;
- GL 128 authorizes certain transactions that are "ordinarily incident and necessary to the purchase of goods and services from, or the maintenance, operation, or wind down of Lukoil retail service stations located outside of the Russian Federation" until November 21, 2025, provided that any payment made to a blocked person is made into a blocked account in accordance with the Russian Harmful Foreign Activities Sanctions Regulations, 31 CFR part 587 (RuHSR).
But the long arm of US sanctions enforcement goes beyond these direct sanctions. Even where the transaction does not occur within the United States, does not involve any US person, and does not involve US dollars, any entity that knowingly engages in a "significant transaction" with a blocked entity may be subject to secondary sanctions. As one former senior State Department official put it, "A Chinese bank, a UAE oil trader, an Indian refinery — if any of them transact with those Russian companies, they could be hit with US sanctions."1 Such secondary sanctions are meant to influence the behavior of actors that lack a direct nexus to the United States.
EU Adopts 19th Russia Sanctions Package to Hit "Where it Hurts"
The EU's 18th Sanctions Package, adopted July 2025, included energy-related measures such as an import ban on refined oil products derived from Russian crude, the lowering of the Oil Price Cap, asset freezes and travel bans throughout the shadow fleet value chain and a transaction ban regarding the Nord Stream pipelines. The 18th Package also included financial, trade and anti-circumvention measures, measures targeting Russia's military capabilities and supply chain, and protective restrictions relating to investor-to-state dispute settlement.
On October 23, 2025, the EU adopted its 19th package of Russia sanctions aimed at the Russian gas and energy sector as well as a number of vessels, Russian banks and Russian-related transactions, services and trade measures (19th Package). The 19th Package targets key sectors: energy, finance, services and military.
- Energy-related sanctions include a total ban on imports of liquefied natural gas and liquefied petroleum gas as of January 1, 2027, for long-term contracts and April 2026 for short-term contracts, additional vessel listings and sanctions across the shadow fleet value chain, and an extension on the port infrastructure ban.
- Transaction sanctions include a full transaction ban on Rosneft and Gazprom Neft, as well as five new banks in Russia and five banks in Central Asia (primarily in Tajikistan and Kyrgyzstan). The 19th package also prohibits A7A5 stablecoin transactions, the first sanction on a cryptocurrency platform.
- Services sanctions include bans on Russian access to digital, energy, scientific and technical services. The existing targeted ban on services to the Russian government will also be reinforced and any non-prohibited services to the Russian government will now require prior authorization, ensuring sufficient scrutiny and oversight.
- Trade-related sanctions include export restrictions and bans on certain items to include certain metals for weapons constructions, salts and rubber-related articles.
According to the Commissioner for Financial Services and the Savings and Investments Union, the goal of this expansion is to hit Russia with a goal of hitting "where it hurts the most."
Conclusion
Together, these three enhanced sanctions packages not only demonstrate the extent to which authorities will go to counter Russian aggression and war efforts, but also exponentially increase the risk of doing business or having any dealings with Russia or Russia-connected entities and individuals across a number of sectors. Parties involved, directly or indirectly, with the newly blocked and sanctioned entities must evaluate the risk of sanctions and tighten compliance controls.
Footnote
1 "U.S. Imposes Substantial New Sanctions on Russian Oil Giants," The Wall Street Journal, October 22, 2025, (9:55 PM).
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