Dec 11, 2025 [ Moodys ]- Recent regulatory developments have introduced sweeping sanctions targeting the energy sector, which can have far-reaching consequences for global supply chains.
The latest EU sanctions package, its nineteenth targeting Russia, alongside similar measures from the US and UK, underscores a significant effort to try to restrict trade with major energy companies and their subsidiaries. These actions are reshaping logistics, compliance requirements, and geopolitical dynamics.
To adapt to meet evolving challenges, leading energy companies are investing in predictive analytics, digital compliance tools, and diversified networks to meet logistical needs. AI-powered platforms for example can now dynamically scan thousands of data points to help flag sanctioned entities, optimize routes, and model the cost and compliance impact of rerouting.
For example, after the EU’s 19th sanctions package in October 2025, indirect sanctions exposure, also referred to as sanctions by extension, became a key risk; even compliant shippers faced higher reinsurance rates, as well as reduced vessel availability and available tonnage. Insurance premiums can rise in relation to indirect sanctions risks as they cause uncertainty and compliance complexity, and they can also elevate the risk of compliance failures. Insurers and reinsurers may therefore price in the possibility of penalties under strict liability regimes.
Companies who invested early in digital risk monitoring and set up alternative corridors and suppliers that mitigated sanctions risks have been better positioned to reduce delays and cut insurance premiums. Sanctions apply to entities designated on a list, which can include tankers or other vessels used to transport oil and gas, as well as subsidiaries of sanctioned entities, which could include sanctioned refineries. Entities that are sanctioned by extension may create a complex compliance landscape, with ownership and control rules varying by jurisdiction.
For example, determining whether an entity is sanctioned by extension often requires aggregating ownership percentages and applying calculations to understand ownership thresholds. Manual checks of beneficial ownership and control can be impractical, if not impossible in this context, making technology-driven solutions all the more important.
This sample diagram shows an organization sanctioned and all those sanctioned by extension that can radiate out from a single entity at its center. It illustrates the scope of potential risk exposure for any organization doing business—buying, selling, financing, insuring—across a complex, global third-party network. Looking ahead, these new sanctions and their possible effects on insurance, banking, and logistics may require energy firms to investigate with extreme care who they are doing business with, as well as having granular traceability for shipments.
Failure to comply could mean heavy fines, reputational damage, or even a risk of being sanctioned themselves. Coupled with ongoing regulatory developments, like the EU Deforestation Regulation and Corporate Sustainability Reporting Directive, compliance teams have much to contend with.
Energy companies who thrive in this landscape may be those who treat sanctions and regulation not as barriers, but as catalysts for improvement and adaptation, leveraging data, analytics, and resources to secure supplies and manage risk.
Sanctions applicable to the energy sector are likely to continue reshaping global supply chains, introducing compliance challenges as well as new risks. Organizations can however leverage technology to navigate risks posed by third-party suppliers, partners, and vendors in their business network.
Technology, powered by data and analytics, can help create a picture of who is sanctioned, of ownership and control, and of financial health, to help maintain resilience. As sanctions persist, automation, adaptability, and proactive risk management could be critical to sustaining operational continuity across the energy sector.
