On January 10, two Russian tankers sat idle in the Yellow Sea after being turned away by China’s Shandong Port Group. Western sanctions had rendered them financially toxic, stripping them of insurance and docking rights. Many others near Indian ports did the same.
In its largest crackdown on Russian oil transport since 2022, when the US had sanctioned 183 vessels, along with commodity traders, insurers, and other financial entities. The January decision, one of the final actions of Joe Biden’s presidency, followed the EU’s 15th sanctions package, which imposed port access bans and service restrictions on 52 vessels from December, bringing the total sanctioned by the bloc to 79. The UK has meanwhile blacklisted a total of 93 ships after sanctioning 20 additional vessels in December.
With these measures, more than 35% of Russia’s shadow tanker fleet is sanctioned, significantly restricting Moscow’s ability to export oil and break the $60 price cap set by the G7 in the wake of the full-scale invasion of Ukraine. Russia has earned about $580 billion in oil export revenue since launching its all-out war of aggression in February 2022.
The effect on the Kremlin’s tankers was temporary, not least because the US said vessels with cargoes picked up before the measures were introduced could discharge. But it seems clear that the West has now found a much better method of imposing restrictions on Russia’s hugely valuable oil sales.
Western allies fine-tuned their approach to Russian oil sanctions throughout last year, gradually moving away from broad export bans on company owners to directly targeting ships carrying crude.
Because tankers are physical assets that cannot be restructured or hidden, blacklisting them has changed the equation and raised the risks for port authorities and others previously willing to turn a blind eye.
The US first launched vessel-specific sanctions in October 2023, targeting a handful of ships. The EU and UK followed, and by July, a total of 53 tankers had been sanctioned, most of which quickly ceased operations.
But there were concerns that further sanctions could remove too much transport capacity, disrupt global oil markets, and drive up prices in a US election year, so the Western allies held off on their expansion. Since then, oil prices have stabilized, and they are once again adding to the list of restricted vessels.
The impact goes beyond blocking trade routes. Once a vessel is blacklisted, it becomes toxic, making commercial operations nearly impossible.
“You cannot provide any financing, insurance, or crewing. You cannot sell the boat, charter it, or dock it,” said Gonzalo Saiz Erausquin, a research fellow at the London-based Royal United Services Institute (RUSI.) “Once these vessels are designated, even in third countries under the threat of secondary sanctions from the US, there is a real impact.”
He said US Executive Order 14114, issued in December 2023, was an important turning point as it enabled secondary sanctions on financial institutions engaging with sanctioned entities or facilitating the transport of Russian oil outside the price cap.
As a result, pressure has piled up on banks, insurers, and port authorities to shun the shadow fleet, and many have done so. Emirati banks, wanting to protect their access to US financial markets, were the first to withdraw from shadow fleet transactions in response to US vessel-specific sanctions in 2023.
“They are forced to make a choice between this business and continuing business with the United States, and usually the decision is quite clear,” said Benjamin Hilgenstock, a senior economist at the Kyiv School of Economics (KSE) Institute.
The sanctions have made transporting Russian oil riskier and more expensive. With a shortage of available vessels, and fewer financial institutions willing to do business with them, freight and insurance premiums have surged.
Following the January 10 sanctions, the cost of each shipment of oil to China has increased to between $6.5 million and $7.5 million, up from $1.5 million last year, and now accounts for around 10% of the cargo’s value, up from around 2%. Routes to India have seen an even sharper increase, tripling to $9 million -$10 million, with shipping costs now making up as much as 14% of the oil’s value.
These rising costs have already slowed the Russian oil trade with China and India as buyers rethink its long-term viability. “Ideally, it will push Russian oil back under the oil price cap,” curbing Moscow’s wartime revenue, Hilgenstock said.
Inevitably, Russia has continued to adapt. Between December 2023 and May 2024, it acquired 38 new tankers to replace the sanctioned vessels and used fake registries and flag-hopping to try to evade restrictions.
But replacement vessels are an expensive and unsustainable fix. With Russian buyers flooding the secondhand market, prices have surged, while the cost of stripping ships of G7+ ties has added further strain.
A key question is whether Western enforcement will maintain its current intensity or escalate further.
There is so far no sign that the Trump administration plans to change oil tanker sanctions policy. Some experts suggest President Donald Trump may intensify them. While the Biden administration aggressively expanded vessel-specific sanctions, Trump has indicated he will continue targeting Russia economically, with the possibility of further action if Moscow refuses to negotiate on Ukraine.
Russia’s shadow fleet is under mounting financial and logistical strain, and there’s little sign that pressure will ease anytime soon.
Mila Tanghe is an Intern with the Editorial team at the Center for European Policy Analysis (CEPA). She is a graduate of Columbia University’s Graduate School of Journalism.
Thomas Penny is an editor and writer based in London. He spent 29 years working for local, national, and international news organizations, including the Mail on Sunday, the Daily Telegraph, and Bloomberg News and is now a freelance specializing in international relations, politics, and conflict.
Europe’s Edge is CEPA’s online journal covering critical topics on the foreign policy docket across Europe and North America. All opinions expressed on Europe’s Edge are those of the author alone and may not represent those of the institutions they represent or the Center for European Policy Analysis. CEPA maintains a strict intellectual independence policy across all its projects and publications.
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