Amid escalating tensions, the U.S. and EU have taken decisive action to curb Russian oil exports, potentially sending shockwaves through global energy markets.
At a Glance
- The U.S. sanctions impact 183 vessels, predominantly oil tankers linked to Russia.
- EU’s 18th round of sanctions aims to implement new price caps and pipeline closures by 2025.
- Sanctions could affect major Russian energy buyers, including India and China.
- Proposed U.S. legislation includes a 500% tariff on nations purchasing Russian energy.
Targeting the Core
The U.S. Treasury has unveiled a new round of sanctions on Russia’s energy sector, targeting 183 vessels. These sanctions aim to choke off revenues by increasing shipping costs for alternative tankers available to non-Russian parties. The International Energy Agency (IEA) cautioned that these measures “could significantly disrupt Russian oil supply and distribution chains,” affecting major Russian producers and insurers.
Analytics indicate a shadow fleet consisting of 890 tankers, tasked with circumventing existing sanctions, of which 107 are now under vessel-specific penalties. Despite past sanctions rerouting Russian oil to Asia-Pacific, these new measures seek to further limit Moscow’s ability to bypass trade barriers.
EU’s Complementary Actions
The EU, not lagging behind, is drafting its 18th sanctions package against Russia, targeting the oil revenues critical to the Kremlin’s ambitions. Proposals include lowering the oil price cap, banning new energy contracts, and closing pipelines to Central and Western Europe by 2025. These combined efforts with U.S. sanctions intend to render much of the shadow fleet inoperable.
“Pressure works, as the Kremlin understands nothing else” – EU President Ursula Von der Leyen.
This looming energy isolation urges Russia and associated parties to consider alternate pipeline infrastructure, a strategic pivot that may take time given the geopolitical complexities and infrastructural investments required.
Navigating New Waters
Washington’s legislative proposal, led by Senator Lindsey Graham, advocates for drastic tariffs on countries that continue purchasing Russian oil. This would critically impact major buyers, including India and China, unless exempted for Ukraine support. The Sanctioning Russia Act of 2025 further fortifies a bipartisan stance, bolstering U.S. pressure on Russia.
“largely oil tankers that are part of the shadow fleet as well as oil tankers owned by Russia-based fleet operators” – U.S. Treasury.
The resulting shifts in the global energy landscape could drive supertanker rates even higher, with rates already up 40% from the Middle East Gulf to the Asia-Pacific region in less than a week. While these strategies aim to erode Russia’s market hold, indirect repercussions will be felt across all energy-importing nations.
