Sweeping new sanctions targeting the global energy sector are redefining how supply chains operate, with regulators in the EU, US and UK introducing far-reaching measures aimed at restricting trade with major energy companies and their subsidiaries.
The EU’s nineteenth sanctions package against Russia, introduced alongside similar restrictions in the US and UK, has intensified pressure on businesses engaged in global energy trade, said Moody’s.
Beyond compliance duties, these rules are reshaping energy security, shifting supply and demand dynamics, and adding new layers of cost as shipments, insurance premiums and logistical delays reverberate across interconnected supply routes.
Since 2022, sanctions imposed by Western governments have forced a significant reconfiguration of oil flows. Russian crude deliveries to Europe have fallen by around 60%, and rerouted shipments now take twice as long to reach their destinations. Although nations outside Europe have increased their purchases, keeping total export volumes close to pre-2022 levels, the wider oil and gas market continues to face volatility. Additional geopolitical shocks, such as the Red Sea crisis, have deepened the disruption—war-risk insurance premiums for vessels crossing the region surged by up to 100%, while freight costs rose as much as 40%. In such conditions, many energy firms lack visibility across their supplier networks, leaving them exposed to cascading disruptions and heightened compliance risks.
To respond, leading energy companies are directing investment towards predictive analytics, digital compliance infrastructure and more diverse supplier networks. AI-powered platforms now enable firms to analyse thousands of data points in real time, flagging sanctioned entities, modelling rerouting options and assessing the cost and regulatory impact of shifting logistics.
The EU’s 19th sanctions package, introduced in October 2025, brought renewed attention to indirect sanctions exposure—often referred to as sanctions by extension—where shippers with no direct sanctions breaches still faced rising reinsurance costs and reduced vessel availability. Indirect exposure increases uncertainty, leading insurers and reinsurers to adjust pricing in anticipation of stricter liability regimes and potential penalties, illustrating the growing financial impact of compliance complexity. Companies that invested early in digital risk tools or secured alternative trade corridors have been able to reduce operational delays and temper these rising insurance costs.
Sanctions apply not only to directly designated entities but also to vessels, refineries and subsidiaries linked through ownership and control structures. Entities sanctioned by extension can create intricate compliance challenges, as thresholds differ across jurisdictions.
Assessing whether an organisation meets these criteria often requires aggregating ownership stakes and applying complex calculations, making manual checks increasingly unfeasible. Technology-driven due diligence is therefore becoming essential to understanding beneficial ownership, mapping subsidiary networks and identifying heightened regulatory risks before they cascade through supply chains.
Looking ahead, energy firms may need to examine their business relationships with unprecedented scrutiny. Detailed traceability of shipments and counterparty assessments will become critical as sanctions reshape insurance, banking and logistics operations. Non-compliance risks are severe—from financial penalties to reputational damage and even the possibility of becoming subject to sanctions themselves. With additional regulatory obligations emerging, such as the EU Deforestation Regulation and the Corporate Sustainability Reporting Directive, compliance teams face an increasingly complex landscape.
Those who succeed may be the firms that treat sanctions not merely as barriers but as drivers for operational improvement, using data, analytics and digital tools to reinforce resilience. Technology can provide clearer visibility into ownership structures, financial health, and sanction status, supporting more robust third-party risk management. As sanctions continue to evolve, adaptability and proactive risk monitoring are likely to define long-term continuity in the global energy sector.
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