An update on the efficacy of sanctions against Russia

Brookings Institution | Robin Brooks, Ben Harris

European Union and United Kingdom maritime sanctions against Russia expanded drastically by July 2025, targeting 444 and 423 Russian-controlled oil tankers respectively to curb Kremlin energy revenues. However, the United States Treasury Department has not designated a single additional vessel since January 10, when 182 ships were sanctioned under the Biden administration.

United States measures demonstrate superior enforcement capability. Secondary sanctions risk from Washington drives an 80 percent reduction in shadow fleet export volumes across designated vessels. This enforcement gap leaves 359 tankers sanctioned by European authorities but omitted from American lists, permitting continued Russian crude oil transport to destinations like India. Joint Western coordination designated 122 ships across all three jurisdictions by mid-2025, up from just 17 in January. Re-aligning American secondary sanctions with European designation lists remains essential to shutting down maritime evasion channels, curbing export earnings, and forcing Moscow toward genuine diplomatic negotiations.

Comment

Primary enforcement mechanisms targeting maritime energy trade depend on secondary financial leverage rather than direct vessel designations. While European Union port bans restrict state-owned carriers like Sovcomflot from European waters, non-Western buyers absorb displaced volume unless American clearing systems threaten correspondent banking access. The Treasury Department's Office of Foreign Assets Control exerts asymmetric structural pressure because global maritime insurance and dollar settlement flow through Western financial intermediaries.

This structural disparity drives non-compliant oil transport into opaque corporate structures, inflating marine insurance and charter costs for shadow fleet operators. Elevated freight premiums directly diminish net revenue for state-backed exporters like Rosneft, even when crude pricing exceeds the G7 price cap at point of sale. Diminished profit margins force Russian energy firms to subsidise aging tanker refurbishment through state financial entities such as VTB Bank.

Strategic Question for Discussion

Which factor imposes a greater long-term constraint on Kremlin energy revenues — direct designation of state carriers like Sovcomflot by Western regulators, or the rising capital costs born by state institutions like VTB Bank to maintain aging shadow fleet tankers?

The available evidence points toward internal capital diversion as the more severe long-term vulnerability for Moscow. While direct vessel designations against Sovcomflot create immediate logistical bottlenecks, the ongoing capital drain required from state entities like VTB Bank to underwrite shadow fleet operations steadily deprives Russian industry of investment capacity. Over time, these cumulative freight and maintenance overheads compress state oil profits far more effectively than easily evaded port restrictions.

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