Europe can tighten sanctions on Russia's oil fleet

The past three years show both the limits and the leverage of sanctions. The G7’s 2022 price cap helped drive a steep discount for Russian crude and cut Russia’s current-account surplus to $50 billion in 2023 from a record $235 billion in 2022, but Moscow adapted quickly by building a shadow fleet of aging tankers and moving exports onto ships beyond direct US reach. According to the supplied data, more than 500 sanctioned vessels outside the US list continued moving Russian oil, and the shadow fleet now handles about two-thirds of tanker traffic leaving Baltic ports, which account for roughly half of Russia’s seaborne crude exports.

That is why Harris and Brooks frame Europe as the decisive actor. The US has largely stopped adding ships to sanctions lists, and the proposed Lindsey Graham sanctions bill is unlikely to change the calculus if Washington is unwilling to enforce secondary pressure. Europe, by contrast, can pressure Greek owners and other sellers of aging vessels, force tighter insurance requirements, and use port-state powers to inspect or detain unsafe ships. Those steps would raise the cost and complexity of operating the shadow fleet, push more trade back onto conventional channels and make the price cap harder to evade.

The market backdrop underscores the stakes. Brent-linked risk has stayed sensitive to Middle East shocks, with US oil proxy USO surging sharply in recent months and technical readings such as RSI remaining elevated, while gold has swung violently as geopolitical-risk gauges spike. That points to an investor market still pricing in supply disruption and sanctions uncertainty, not a clean resolution. Any successful tightening of Russian oil enforcement would be bullish for price discipline in crude, bearish for Russian fiscal resilience and likely supportive for non-Russian producers, while forcing refiners and importers to adjust to a less predictable trade route structure.

There is also a political narrative behind the policy case. The article argues that sanctions have been dismissed too easily because the West has not used its strongest tools consistently. If Europe closes ownership loopholes, tightens marine insurance enforcement and reduces the ability of third-country flag registries to shelter Russian cargoes, it can cut Moscow’s proceeds without triggering the price spike that worried policymakers in 2022. For investors, the key question is not whether Russia can still sell oil — it can — but whether it can keep selling at discounted terms or recover the kind of pricing power that supports the war budget.

The next catalyst is enforcement, not legislation. If Brussels and London move first, Russian crude discounts could widen again, Treasury income could weaken and the market may begin to treat sanctions as a real supply-side constraint rather than a headline risk. If they do not, Moscow keeps the cash flow, the shadow fleet keeps expanding, and sanctions remain a drag on Russia’s economy rather than a decisive constraint.