Overview
The Sanctions Update, compiled by attorneys from Steptoe’s award-winning International Regulatory Compliance team and the Stepwise: Risk Outlook editorial team, publishes every Monday. Guided by the knowledge of Steptoe’s industry-leading International Trade and Regulatory Compliance team, the Sanctions Update compiles and contextualizes weekly developments in international regulatory enforcement and compliance, as well as offers insights on geopolitical context, business impacts, and forthcoming risks.
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The Lede
US and EU Follow UK to Crack Down on Russian Oil and Gas Revenues
Last Wednesday evening, the US and EU announced major new sanctions on Russia’s oil and gas sector: the US announced sanctions on Russian oil majors Lukoil and Rosneft, and EU member states approved a 19thround of sanctions against Moscow that included a ban on Russian liquefied natural gas (LNG) by 2027. The actions follow steps a week earlier by the UK, in which London designated Rosneft and Lukoil, as well as imposing sanctions on a number of Chinese and Indian entities. Compared to early efforts to sanction Russia’s energy revenues, which sought to preserve stability of supply to prevent price shocks, actions last week represent a significant shift in the intensity and scope of Western efforts, although levers of influence against Moscow continue to wane over three and a half years since Russia’s full-scale invasion of Ukraine. Nonetheless, impacts—for Russia, its major buyers, and the broader economy—will likely be felt in both the near and long term, as the Russian economy falters and the international energy market reorganizes itself away from Moscow.
On Wednesday, the US designated Rosneft and Lukoil, as well as a number of Russia-based subsidiaries, pursuant to E.O. 14024 for operating or having operated in the energy sector of the Russian Federation economy. Both companies, which are Russia’s two largest oil companies, together account for 5% of global production, and were also sanctioned by the UK a week earlier. The action is a U-turn for President Trump, who for the past several months has held Congress back from imposing more serious oil and gas sanctions as he sought a negotiated settlement with President Putin. Trump concurrently announced that a reported summit with his Russian counterpart in Budapest this coming week would not happen, calling it a “waste of time” (although he promised a meeting would happen in the future).
The announcement coincided with the final approval of the EU’s 19thsanctions package on Russia. The package had been delayed for weeks over opposition from Hungary, Austria and, in the final week, Slovakia over concerns around the economic impact of further limiting purchases of Russian hydrocarbons. This includes the centerpiece of this most recent package—a complete EU ban on Russian LNG by 2027. Europe remains the biggest buyer of Russia’s LNG cargoes, accounting for about half of Russia’s exports but only 16% of EU purchases in 2024. The sanctions package also included a transaction ban on Rosneft and Gazprom Neft, another major Russian producer, and further listings of Russia’s shadow fleet, as part of the ongoing effort to weaken Russia’s main revenue centers as it funds its war in Ukraine and keeps its economy afloat amid escalating global sanctions.
Both announcements followed earlier steps by the UK—on October 15, the UK government imposed a range of sanctions on Rosneft and Lukoil, as well as several Chinese and Indian refiners and port operators involved in Rosneft and Lukoil supply chains. In addition to imposing direct costs on the two oil majors, the UK’s sanctions will reduce the availability of ship insurance for Russia, given the dominance of UK maritime insurers and the fact that some Russian oil was still reportedly being insured by British companies. The UK has also announced its intention to impose further sanctions banning imports of oil products refined in third countries from Russian-origin crude oil, although further details of those measures have not yet been released.
The impact of these new measures—for Russia, its major buyers, and the global economy writ large—is uncertain. While Russia has brushed off the measures, a sharp drop in demand for its crude could rattle its already fragile economy and could impact its war in Ukraine. Rosneft and Lukoil together account for roughly half of Russia’s daily crude exports, and oil and gas revenues fund roughly 40% of Russia’s state budget. While initial shocks may be limited, given significant Russian planning for this eventuality and the one-month wind-down period offered by the US, the US’ sanctions will accelerate timelines for more fully eliminating Russian hydrocarbons, moving forward economic costs for Russia-dependent European states, disrupting the supply of major buyers and reducing liquidity in the global market. Much of the impact will hinge on perceptions by major buyers of the US’ willingness and ability to apply consequences to Rosneft and Lukoil buyers, an effort that will be a process even with full commitment. Nonetheless, Russia’s economy is in a shaky place—Ukrainian President Zelenskyy has estimated that Russia will see a $100 billion deficit in 2026, in large part due to the squeeze of sanctions on financial transactions and energy, as well as Ukraine’s campaign against Russian oil and gas infrastructure. And Russia may be running out of strategies to stave off these impacts; for example, state liquidity is limited and 2025 is estimated to be the last year that Moscow can use its National Welfare Fund to cover its fiscal deficit.
Oil jumped 5% following the US’ announcement, with China and India—who together purchase an estimated 85% of Russian crude—weighing the risk of secondary sanctions, and already seeing a supply jolt. Chinese oil majors have reportedly already suspended purchases of Russian seaborne oil, and Indian refiners are set to sharply cut Russian imports to comply with US sanctions. China’s suspension of only seaborne crude reflects a lack of clarity on the sanctions’ impact on the long-term pipeline supply contract between Rosneft and the state-owned China National Petroleum Corp., which early analysis says may be in a gray zone due to the government-to-government nature of the contract. For India, the new US sanctions may be the final push towards ending Russian crude imports—an outcome Washington has pushed for months, including with the August imposition of 50% in total blanket tariff rates. Media reported earlier last week that New Delhi and Washington are on the verge of a trade deal that could see tariffs slashed to 15-16%, in exchange for fully ending Russian crude imports.
The sanctions will also have a global economic impact as the drop in global supply strains liquidity and puts upward pressure on prices. The alternative for both China and India is more Middle Eastern crude, where there is spare capacity. Following the new sanctions announcement, Kuwait told news outlets that OPEC is ready to increase output by rolling back production cuts to address market shortfalls, if necessary. Excess Gulf liquidity, then, will likely prevent the worst of the supply jolts for buyers outside of India and China. New Delhi and Beijing, though, will have to account for higher prices of non-Russian crude (the discount resulted in an estimated $9 to 13 billion in oil savings over 39 months, per Indian reporting). While India will wither the lost discount, especially with a prospective trade truce with the US, it must navigate an unsettled global trade environment and energy market.
US Developments
US Sanctions Russia’s Two Largest Oil Companies
On October 22, the Department of the Treasury’s Office of Foreign Assets Control (OFAC) sanctioned Russia’s two largest oil companies: Open Joint Stock Company Rosneft Oil Company (“Rosneft”) and Lukoil OAO (“Lukoil”). OFAC also designated 34 Russia-based subsidiaries of either Rosneft or Lukoil. Secretary of the Treasury Steve Bessent said the sanctions were due to “Putin’s refusal to end [the] senseless war” in Ukraine and warned that “Treasury is prepared to take further action” to reach a peace deal. In its press release, OFAC warned that foreign financial institutions that conduct or facilitate significant transactions or provide services to Rosneft and Lukoil may risk the imposition of secondary sanctions.
OFAC also issued several general licenses (“GLs”) authorizing certain transactions involving Rosneft, Lukoil, or their affiliated companies. In particular, OFAC authorized (i) certain transactions related to Caspian Pipeline Consortium or Tengizchevroil projects (GL 124A); (ii) certain wind down transactions until November 21, 2025 (GL 126); (iii) certain transactions related to debt or equity of, or derivative contracts, involving Rosneft or Lukoil until November 21, 2025 (GL 127); and (iv) certain transactions involving Lukoil retail service stations located outside of Russa until November 21, 2025. (GL 128)
These are the first sanctions the US has imposed against Russia since President Trump entered office for his second term. They come as Trump reportedly shelved plans to meet with Vladimir Putin in Budapest following Moscow’s rejection of a ceasefire. For months, President Trump has raised the threat of sanctions as a tool for ending the war in Ukraine, these sanctions mark the first time that his administration has backed up those claims with action.
After OFAC announced the new designations, Congress began mulling options to increase pressure on the Kremlin. Senator Lindsey Graham (R-SC), one of the co-sponsors of the sweeping Sanctioning Russia Act of 2025, said, for example, that the Senate could schedule a “Russia week” to take up several bills related to the war in Ukraine. These bills would presumably include the STOP Russia and China Act, which would impose sanctions on entities and individuals in the PRC who are determined to be supporting Russia’s defense-industrial base through the provision of goods and services related to dual-use technologies. It would also likely include the Designating the Russian Federation as a State Sponsor of Terrorism Act, which, as its name suggests, would direct the Secretary of State to designate Russia as a State Sponsor of Terrorism (SST) unless Russia meets certain conditions. Both of these bills recently passed out of the Senate Foreign Relations Committee.
OFAC Designates Colombian President and Members of His Family
On October 24, OFAC designated the President of Colombia, Gustavo Petro, pursuant to counter-narcotics authorities. OFAC also designated Petro’s wife, son, and a close associate. In announcing the designation, Secretary Bessent said that “President Petro has allowed drug cartels to flourish and refused to stop this activity” and that President Trump “will not tolerate the trafficking of drugs” into the US. More specifically, OFAC alleges that Petro “has provided narco-terrorist organizations with benefits under the auspices of his ‘total peace’ plan” and other policies that have, according to OFAC, permitted increased coca cultivation and cocaine production.
OFAC’s announcement came as Secretary of State Marco Rubio’s decided not to certify Colombia under the criteria of the Department of State, Foreign Operations, and Related Programs Appropriations Act, 2024, as carried forward by the Full-Year Continuing Appropriations Act, 2025, which may jeopardize Colombia’s ability to receive certain assistance from the United States. President Trump also previously issued a Determination on September 15, 2025, stating that Colombia is a “major drug transit or major illicit drug producing” country.
OFAC and the State Department’s recent actions are representative of an increasingly fraught relationship between Trump and Petro. Earlier this year, Colombia denied entry to US aircraft transporting Colombian deportees, which drew the ire of Trump. Petro, when in New York for the United Nations General Assembly (UNGA), also urged the US military to disobey Trump’s orders, resulting in his visa being revoked by the State Department. More recently, Petro has condemned US airstrikes on alleged narco-trafficking vessels, calling those strikes “murder.” Trump had called Petro “an illegal drug leader” and promised retaliatory measures against Colombia, including withholding aid and increasing tariffs.
UK Developments
UK Government Targets People Smuggling Gang Members in Latest Sanctions
The UK Government has designated 12 individuals and one entity under the Global Irregular Migration and Trafficking in Persons (Sanctions) Regulations 2025, marking the second round of designations under this novel sanctions regime introduced in July 2025. According to a UK Government press release, the new measures target individuals linked to a Western Balkans people-smuggling network and members of the Krasniqi organised crime group, a Kosovo-based group involved in producing and supplying false documents to criminal gangs across Europe. The UK Government has also designated Alpa Trading FZCO, which is said to have financed people-smuggling activities.
New Designations Made Under UK Haiti Sanctions Regime
The UK Government has designated two individuals, Dimitri Herard and Kempes Sanon, involved in activities threatening the peace, security, and stability of Haiti, under the Haiti (Sanctions) Regulations 2022, implementing their UN designations in the UK. According to their UK designation notices, both individuals are, among other things, being targeted for supporting individuals designated by the UN. Mr. Herard is identified as one of the primary threats to the political transition in Haiti, while Mr. Sanon has also been involved in the consolidation of power by gangs over Port-au-Prince.
UK Government Removes Hay’at Tahrir al-Sham from the UK Terrorist Organisation List
The UK Government has deproscribed Hay’at Tahrir al-Sham (HTS) from the UK terrorist organisation list. The action is intended to promote closer engagement between the UK and the new Syrian government to support UK foreign and domestic priorities. The decision to remove HTS from the proscribed list was taken following detailed consultation with operational partners and other UK Government departments, as well as a robust assessment by the cross-government Proscription Review Group. In a press release announcing the action, the UK Government emphasised that it will continue to press for genuine progress and hold the Syrian government accountable for its actions in fighting terrorism and restoring stability in Syria and the wider region, judging its efforts based on their actions not on their words.
OFSI Issues New General Licence Authorizing the Continuation of Business with Rosneft’s German Subsidiaries
OFSI has issued a new General Licence INT/2025/7598960 (the “Russia GL”) authorising the continuation of business operations involving Rosneft Deutschland GmbH, RN Refining & Marketing GmbH, and their subsidiaries, which are under German state control and play a critical role in German energy security. The Russia GL took effect from October 22, 2025, and expires at 23:59 on October 22, 2027. Any persons intending to use the Russia GL should consult the copy of the licence for full details of the definition, permissions, and usage requirements. Additionally, OFSI has released FAQ 169 to accompany the Russia GL, which confirms that UK sanctions are not intended to negatively affect the operation of these entities and that business operations may continue as normal with these entities subject to compliance with the terms of the licence.
OFSI Issues New General Licence Authorizing Certain Payment to Employees and Service Providers by Sanctioned Iranian Financial Institutions
OFSI has issued a new General Licence INT/2025/7628424 (the “Iran GL”) authorising five designated Iranian financial institutions (i.e., Bank Melli, Bank Saderat Iran, Bank Tejarat, Persia International Bank Plc, and Iran Insurance Company) to make payments of remuneration and benefits to UK employees and directors, as well as fees and costs related to services provided by IT providers and UK accountants relating to the institutions’ operations in the UK. The Iran GL took effect from October 23, 2025, and expires at 23:59 on April 22, 2026. Any persons intending to use the Iran GL should consult the copy of the licence for full details of the definition, permissions, and usage requirements.
OFSI Issues Newly Expanded UK Legal Services General Licence
The UK has published a new General Licence INT/2025/7323088 that significantly expands the scope of permitted legal services payments involving sanctioned persons (the “GL”). The GL allows UK law firms, legal advisers, and counsel to receive payment of legal fees and expenses from individuals and entities designated under most UK sanctions regimes without needing a specific OFSI licence. This GL will replace the previous legal services general licence, which applied only to legal services payments under the UK’s Russia and Belarus sanctions regimes. The GL will take effect from October 29, 2025. The new GL covers nearly all UK sanctions regimes, with a few exceptions including Afghanistan, Haiti, Iraq, ISIL and Al-Qaida, and counterterrorism regimes. Payments must comply with the conditions in the GL and cannot be made to or for the benefit of UN-designated persons. Fees and expense caps remain unchanged, and firms must report any payments received within 14 days via OFSI’s online form. The GL will expire at 23.59 on April 28, 2026, unless renewed.
EU Developments
EU Council Adopts 19th Sanctions Package Against Russia
On October 23, the EU Council adopted its 19th sanctions package against Russia. The set of restrictive measures focuses on Russia’s energy, trade, finance, and military sectors, aiming to deprive Russia of resources needed to fund its war efforts. The package also targets entities in third countries such as Belarus, China, and India that are allegedly supporting Russia’s military operations. Notably, the sanctions framework under Decision 2012/642/CFSP targeting Belarus has been aligned with the newly adopted measures against Russia.
In the energy sector, the package introduces a ban on imports of Russian liquefied natural gas (LNG) into the EU effective April 25, 2026. For long-term contracts concluded before June 17, 2025 that have not been amended thereafter, the ban will apply from January 2027. Major Russian oil companies Rosneft and Gazprom Neft are now subject to a full transaction ban. In addition, third-country entities active in the Russian oil sector have been designated, including two refineries and a Chinese oil trader identified as significant buyers of Russian crude oil. Restrictive measures against the shadow fleet include the listing of Litasco Middle East DMCC, the designation of maritime registries that provide false flags, and the addition of 117 vessels linked to Russia’s shadow fleet. The list of partner countries exempt from proving the origin of crude oil used in refining was expanded to include Australia, Japan, and New Zealand.
In the trade sector, 45 entities from Russia and third countries face export restrictions on dual-use goods and advanced technology items. The package also bans exports of goods that may support Russian industrial capacity, such as salts, ores, and rubber articles. A ban is introduced on the purchase, import or transfer of acyclic hydrocarbons.
In the financial sector, new listings target entities that undermine sanctions, including a crypto platform, banks, and financial institutions from third countries such as Kyrgyzstan and Tajikistan. The use of the Russian National Payment Card System (Mir) and the Fast Payments System (SBP) is prohibited starting from January 2026. Crypto transactions are further restricted, especially those involving the stablecoin A7A5 which has been linked to sanctions circumvention. The latest package bans crypto-asset services, certain payment services, and the issuance of electronic money to Russian nationals and persons or entities in Russia.
Additional measures include the listing of businesspersons and entities linked to Russia’s military industrial complex. The package also contains new provisions restricting the movement of Russian diplomats and consular staff within the EU through a prior notification mechanism. Lastly, any service provided to the Russian government that is not covered under existing service restrictions is now subject to an authorization requirement. For a more extensive overview of the latest package, consult Steptoe’s International Compliance Blog article of October 24.
EU Council and European Parliament Reach Negotiating Positions on Russian Energy Phase Out Proposal
On October 20, the EU Council agreed on its negotiating position on the Commission’s legislative proposal to phase out the import of Russian gas and oil as part of the EU’s REPowerEU strategy to end dependency on Russian energy. The Council confirmed the full ban on pipeline gas and liquefied natural gas (LNG) imports from Russia effective January 1, 2028, while allowing a transition phase for existing supply contracts. According to the Council’s position, imports of Russian gas will be prohibited from January 1, 2026, but short-term contracts signed before June 17, 2025 may continue until June 17, 2026, and long-term contracts may run until January 1, 2028.
In terms of customs and authorization procedures, Russian gas and imports falling under the transition period must submit their documentation one month before entry; non-Russian gas must be declared five days in advance. Mixed LNG cargos are required to specify Russian and non-Russian shares in the mixture, with only the latter permitted. The EU Council’s position includes the possibility for imports from selected countries to be exempt from the authorization requirement. In addition, certain EU Member States may be exempt from submitting national diversification plans if they can demonstrate that they no longer receive imports of Russian gas. Additional monitoring and notification mechanisms have also been introduced to prevent Russian gas from entering the EU under transit procedures.
Negotiations between the EU Council and the European Parliament will now begin, as the European Parliament also reached its negotiating position on the Commission’s proposal. Members of the European Parliament in the Committee on Industry, Research and Energy (ITRE) and International Trade (INTA) voted to accelerate the energy phase-out, ending Russian oil imports by 2026 and Russian gas by 2027. In addition to fast-tracking the ban, the European Parliament’s position removes the exemption allowing the EU Commission to suspend the proposed Regulation during a supply crisis and introduces stricter evidence requirements for EU operators to provide customs authorities with proof of the gas’s country of production before import or storage. To expedite the process, ITRE-INTA Committee members agreed to skip a final plenary vote and move directly to trilogue negotiations with the aim of finalizing the Regulation by year-end.
EU Sanctions Against Hamas, Extremist Ministers of the Israeli Government and Violent Settlers Stalled Amid Ceasefire Agreement
The European Commission’s proposed sanctions targeting Hamas, extremist Israeli ministers and violent West Bank settlers has been put on hold due to political divisions among EU Member States and concerns over the ceasefire agreement between Israel and Hamas.
Following a Foreign Affairs Council meeting, High Representative Kaja Kallas announced that the EU would temporarily halt discussions on the proposed sanctions. According to Kallas, the situation had evolved since the restrictive measures were presented, particularly in light of recent peacemaking efforts to maintain the ceasefire. Although the Commission’s proposal remains formally on the table, Kallas stated that its future may be reassessed based on developments in the coming weeks.
Asia-Pacific Developments
China Condemns EU’s Latest Russia Sanctions Targeting Major Chinese Oil Firms
The Chinese government has condemned the EU’s first-time inclusion of two Chinese refineries and an oil trader in its 19th package of sanctions against Russia, warning that the move undermines bilateral economic ties and threatens global energy security. On October 23, 2025, despite repeated diplomatic protests, the EU has targeted large refiners Shandong Yulong Petrochemical and Liaoyang Petrochemical — reportedly with a combined capacity of 600,000 barrels per day — along with Chinaoil Hong Kong and Tianjin Xishan Fusheng International Trading Co., accusing them of purchasing Russian crude and helping Moscow evade trade restrictions. Beijing argues the measures lack “legal basis under international law without United Nations authorization,” and cautions that “such actions contradict commitments made between Chinese and EU leaders.” The Ministry of Commerce said, “China will take necessary steps to protect the rights of its firms,” urging the EU to “immediately cease adding Chinese companies to its sanctions list and warning against further escalation.”
