On 10 January, the U.S. Department of the Treasury imposed its most extensive sanctions package to date, targeting Russia-controlled manufacturers, insurers, trading vessels, senior officials, and foreign entities operating for Moscow’s benefit. The UK joined in the measures, reinforcing Western pressure. Officially, the sanctions were introduced under the obligations of the oil “price cap coalition,” aimed at curbing Russia’s revenues from seaborne crude and refined product exports.
Despite widespread attention to the restrictions, Moscow’s advance preparations and the associated costs have remained largely obscure in the initial weeks. Experts from the Russian and Belarusian Studies Programme at the Foreign Policy Council “Ukrainian Prism” — Iaroslav Chornogor, Anton Oksentiuk, and intern Vladyslav Voitenko — analysed the sanctions’ immediate and long-term effects.
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A multifaced crackdown
While media coverage has largely framed the sanctions package in the context of the oil sector, it is, in fact, a broad and multifaceted effort aimed at restricting Russia’s access to all available energy revenues and related income streams. The measures target two major oil exporters—Gazprom Neft and Surgutneftegas—along with their 28 subsidiaries, as well as 53 Russian oilfield service companies. Also sanctioned were 183 vessels, most of which belong to the so-called “shadow fleet” and state-owned Sovcomflot, alongside 16 foreign trading firms and nine foreign affiliated individuals.
The crackdown extends to companies involved in Moscow’s high-profile Vostok Oil project, including LLC Vostok Oil and LLC Tagulskoe, as well as foreign entities with ties to Russian energy interests. Among them are Chinese oil terminal operator Shandong United Energy Pipeline Transportation Co. Ltd and its subsidiary Guangrao Lianhe Energy Pipeline Conveyor Co. Ltd, as well as Kazakhstan-based Umbra Navi Shipmanagement Corp., which has links to Sovcomflot. Two major Russian insurers, Ingosstrakh and Alfastrakhovanie, were also blacklisted, along with 28 Russian nationals active in the energy sector.
Beyond the oil sector, the sanctions extend to 18 coal enterprises, 13 LNG-related firms, six refineries and abrasive materials producers, and a lithium company, LLC Polar Lithium. The measures include carve-outs, with the U.S. issuing eight specific licences allowing sanctioned entities to complete outstanding transactions or maintain a presence in the Russian market until between February and June 2025, depending on the licence.
Broader impact on Russian oil exports and global shipping
According to estimates from London-based EA Gibson Shipbrokers, 161 of the sanctioned vessels have the capacity to transport 1.4 million barrels of oil per day—a volume expected to decline sharply in the coming months. The tally includes 122 actively operating ships and 21 that have not called at Russian ports for over a year. The restrictions appear designed to pre-empt any rapid replacement of sanctioned vessels with new Russian-owned tankers, making sanctions evasion a more protracted and costly process. Overall, the U.S. has now blacklisted more than 270 vessels, from a total of 820–850 active oil carriers as of December 2024—effectively targeting 42% of Moscow’s official and unofficial seaborne oil exports.
It’s vital to first understand the broader context. The sanctions imposed on 10 January are part of a series of measures introduced since early 2024 to tighten restrictions on Russian energy exports. The U.S. has played a central role in this effort, with its enforcement proving more effective than that of its allies. According to Bloomberg, of the 39 tankers sanctioned in previous U.S. packages, 33 have not taken on cargo at Russian ports since being blacklisted. Two additional factors help explain the latest measures. The first is a shift in public sentiment, with support for tougher action against Moscow intensifying amid the ongoing Russian war in Ukraine. The second is stabilisation in global oil markets, with the International Energy Agency reporting a surplus of 725,000 barrels per day in 2024. Against this backdrop, Washington may also be seeking to drive down the price of Russian oil while supporting higher domestic prices—moves that would ultimately strengthen the U.S. oil industry’s long-term expansion.
It’s worth emphasising that the regulations in this sanctions package are primarily aimed at individuals and entities directly or indirectly controlled by the Russian government. While the “shadow fleet” has faced significant scrutiny, attention has also been drawn to some of the most prominent producers, suppliers, and insurers in Russia, who play a key role in the country’s oil and refinery exports.
Alongside a large number of tankers, the sanctions also target storage tankers, shuttle tankers, fuelers, supply ships, bulk carriers, and even LNG tankers. These additions make it harder for Russia’s underperforming oil markers, which require specialised equipment, to withstand supply cuts.
While European subsidiaries of oil corporations are under pressure, the primary focus is clearly on Russia’s trading relations with China and India, which now account for 81% of its crude oil exports. According to the Brookings Institution, 20% of “Sovcomflot” vessels in the Pacific are blocked, along with 60% of the Pacific-based “shadow fleet.”
The impact of the sanctions remains uncertain. In the days following their implementation, around 100 operational vessels either dropped anchor or altered course. At the same time, export prices for Russian crude rose by between $1 and $4.50 per barrel at several ports, and the average daily earnings of supertankers increased by 10%. Activity in the financial Swift transactions market also saw a notable uptick.
However, while Russian oil prices initially surged, they have since declined steadily since mid-January, now sitting below global averages—except for the ESPO blend, a grade popular in China and considered one of the more promising markers. Meanwhile, refinery managers in China and India have warned of significant supply delays of up to 800,000 barrels per day over the next three to six months, once the temporary licences granted for certain transactions expire. This is when the full impact of the sanctions is expected to be most strongly felt.
Despite the growing pressure, the demand for Russian exports is holding steady. Private refineries in Asian countries, more reliant on discounted oil, have been less cautious about sticking to the sanctions.
For instance, India has extended contracts with major sanctioned insurers, even increasing their numbers. Meanwhile, several ships from Russia’s “shadow fleet” have been turning off their navigation sensors or hiding their destinations, effectively heading to ports that buy Russian oil. With just 10% of the global tanker fleet currently under the oil “price cap coalition” restrictions, Russia still has room to mobilise new resources and set up fake legal entities despite the added risks and costs. Even with secondary sanctions in place, these measures may not fully succeed without more consistent enforcement. Ultimately, the impact will depend on how the Trump administration shapes its foreign policy moving forward.
Few have highlighted it, but Russia appears to have factored the impact of oil sanctions into its budget planning well in advance. The federal budget for 2025 projects oil and gas revenues of 10.9 trillion rubles, down from 11.3 trillion rubles in 2024. With total spending set to reach a record 41.5 trillion rubles, the share of oil and gas revenues is expected to decline from 31.3% in 2024 to 27.1%, as Moscow leans more heavily on higher taxes and increased fees to offset the shortfall.
Notably, the budget assumes an oil price of around $70 per barrel and anticipates a sharp drop in revenues from the mineral extraction tax, alongside increased subsidies for petroleum refineries. This suggests that, in the view of Russian officials, revenues from seaborne oil exports must remain high. Against this backdrop, Moscow is likely to continue its efforts to stabilise global oil markets and push back against any rapid structural shifts that threaten its interests.
OPEC+ and Russia’s position in global oil markets
It is also worth considering the role of OPEC+, in which Russia is a key participant. Two factors stand out: in this context, the trajectory of Russian oil production and the bloc’s response to U.S. proposals to flood the market with newly extracted crude in an effort to drive down prices.
The first factor—Moscow’s plans to cut oil output from late March—suggests a pre-emptive move in anticipation of an oversupply of crude and refined products, despite previous agreements among OPEC+ producers to curb production. The second was reflected in the outcomes of the Joint Ministerial Monitoring Committee meeting on 3 February. According to Russia’s Deputy Prime Minister, Alexander Novak, OPEC+ will stick to its planned production increase from April 2025, citing expectations of rising demand—particularly from China, the world’s largest crude importer.
The agreement also extends OPEC+ cooperation until the end of 2026. Given that the bloc has already postponed its planned production increases three times—and that the Trump administration previously estimated the ideal oil price range at $60 to $70 per barrel to address macroeconomic imbalances—there is little sign of a clear-cut “deal” between the parties.
At the same time, some analysts point out that the U.S. cannot fully replace Russian supply on its own, given constraints on its oil reserves and the natural cost of current production.Moreover, Washington’s confrontational stance toward oil producers is nothing new.
Similar pressure was resisted during Trump’s first term, with the only major exception occurring during the global financial turmoil triggered by the Covid-19 pandemic, when economic necessity forced former rivals to cooperate to protect their oil industries.
On the other hand, Moscow continues to view the U.S. decision to ramp up sanctions against it and its key energy partners—namely Iran and Venezuela—as detrimental. An excessive tightening of supply could prompt an early boost in oil production, creating a scenario that could ultimately benefit the U.S. with steadily falling prices. This dynamic could also exacerbate tensions with Saudi Arabia, another oil superpower, which is unlikely to want to sacrifice its revenues.
In such a scenario, OPEC+ members are expected to adopt a cautious and measured approach to any American proposals. At the same time, the Kremlin will likely aim to show a willingness to engage in dialogue over “conflict resolution” while avoiding further punitive measures from Washington. Ultimately, the direction of events will depend on the unity within the oil cartel and the seriousness with which the Trump administration pursues its objective to “freeze” hostilities between Ukraine and Russia.
Long-term prospects and Ukraine’s role
To sum up, the most significant obstacles to Russian oil exports are taking shape and will become evident in the coming months. A swift adaptation by market players to early warnings about potential sanctions at the end of December 2024, alongside the ongoing presence of a sizable “shadow fleet,” remains a key feature of the current situation. In this context, it seems the Kremlin’s ability to return to its typical seaborne trading capacity may be shorter this time, particularly without sustained pressure on the Russian government or any emerging tensions within OPEC+.
For Ukraine, which stands to benefit most from a drop in Russian oil prices, it will be crucial to continue tracking new additions to the active supply fleet, providing partners with accurate and timely information. Additionally, Ukraine should push for stronger enforcement of sanctions before the new U.S. administration or work to prevent any easing of restrictions in the U.S. Congress. Attention must also be drawn to the growing imports of liquefied natural gas from Russia, which, according to energy market experts, could become a highly lucrative sector for Russia and other countries with large natural gas reserves.
Ukraine stands to gain the most if both Russia’s oil and gas exports are blocked. In this regard, it could present the U.S. with the opportunity to incorporate these measures into a broader energy strategy.
