U.S. President Donald Trump recently declared his readiness to impose sweeping sanctions on Russia—contingent on NATO countries halting their purchases of Russian oil. While this declaration sounds assertive, the reality is far more complex. Currently, only three out of NATO’s 32 member countries—Hungary, Slovakia, and Turkey—are still importing Russian oil, while the European Union has committed to phasing out Russian fossil fuels by the end of 2027. Particularly notable is Turkey, one of Russia’s largest customers, which shows little inclination to align itself with Western policies, rendering a complete NATO embargo unrealistic.
If persuading buyers to abandon Russian oil is challenging, where can Washington, Brussels, and the G-7 effectively target Russia’s war economy in both practical and impactful ways? The answer lies not in waiting for 2027 or hoping for a shift in Turkey’s stance, but in addressing the shadow fleet—a network of vessels that enables Russia to continue funding its war while circumventing the West’s economic sanctions.
Before sanctions were imposed in 2022, nearly 90 percent of Russia’s fossil fuel exports were transported through standard Western markets. However, the shadow fleet, which Moscow began assembling prior to the EU embargo, is not merely redirecting Russian oil to new Asian markets. It was specifically designed to bypass the G-7+ oil price cap, which allows trade in Russian crude only if sold below $60 a barrel. This price cap relies on Western insurers to enforce compliance, but Russia has created a closed system where every participant—shipowner, manager, insurer, and flag registry—operates outside the jurisdiction of G-7 nations. As a result, the share of Russian oil shipments carried by shadow tankers has surged from 13 percent in 2021 to 47 percent as of August 2025. By the third year of the war, this fleet accounted for approximately one-third of Russia’s fossil fuel export revenues, with fossil fuels sustaining 30-50 percent of the federal budget and directly funding Moscow’s military actions in Ukraine.
The implications of the shadow fleet extend beyond the financial realm; it also undermines the credibility of sanctions as a foreign-policy tool. The resilience of Russia’s economy can be attributed to the weak enforcement of sanctions and the porous nature of export controls, particularly as U.S. goods flow through countries that do not enforce sanctions. The reliance on sanctions as a primary tool of leverage diminishes when they can be easily evaded.
Recognizing the threat posed by the shadow fleet, Western governments initially targeted the companies managing the vessels. However, this approach proved ineffective, with new entities emerging in offshore havens each time a firm was blacklisted—a frustrating game of whack-a-mole that allowed the flow of Russian oil to continue unabated. Consequently, policymakers shifted their focus to vessel designations, yielding more significant results. The U.S. Treasury Department sanctioned 211 tankers, leading to an immediate impact: from January to July, without any new U.S. designations this year, only 11 percent of the designated vessels continued operations in Russia. The EU escalated its efforts, blacklisting 415 ships by July, though 17 percent remained operational. In contrast, U.K.-designated vessels saw 24 percent continuing to load. Despite these leakages, the overall trend indicated that the shadow fleet’s share of Russian crude exports decreased from 84 percent in January to 58 percent in July, before rising again to 64 percent in August. These designations not only disrupted flows but also restored leverage, as Russia relies on tankers to transport its oil, and Western-controlled vessels must adhere to the price cap.
However, the fragmented nature of the sanctions presents a significant vulnerability. Few ships appear on multiple sanctions lists, creating loopholes that Russia can exploit. A tanker banned from European waters may still find buyers in Asia, while one targeted by Washington may operate freely in the Mediterranean. This lack of harmonization conveys disunity, suggesting to Russia and global markets that Western resolve is negotiable.
Efforts to close these loopholes are underway, with the EU and other sanctioning nations gradually aligning their vessel lists with those of the United Kingdom, Australia, Canada, and New Zealand. However, the United States, once the driving force behind these sanctions, has been noticeably absent. Following President Joe Biden’s departure from office in January, during which he implemented extensive sanctions on the shadow fleet, Washington largely paused new sanctions. Although many remain in place, some enforcement mechanisms have been dismantled, including the disbandment of Task Force KleptoCapture, which targeted Russian oligarchs. Moreover, the Treasury Department’s Office of Foreign Assets Control permitted major Russian banks to carry out transactions for Hungary’s Paks Nuclear Power Plant until December. The U.S. has also declined to lower the oil price cap, despite most allies advocating for a reduction. These developments have hampered enforcement and raised questions about the U.S. commitment to using sanctions as a primary pressure tool against Moscow.
As former U.S. Secretary of State Henry Kissinger noted, successful negotiations depend on parties’ agreement on what is realistically achievable. Coordinating vessel designations among the United States, the EU, and other partners aligns perfectly with this principle: it is a low-cost, high-impact strategy. In practice, sanctions placed on tankers in Brussels should be mirrored in Washington and vice versa. Given the strategic importance of the shadow fleet to Russia, a joint task force should be established to share real-time intelligence regarding vessel movements, ownership, flagging, and insurance. Unlike the challenge of persuading Turkey to reduce purchases, pressuring India with tariffs, or waiting for the EU’s 2027 phase-out, synchronized sanctions require minimal political capital but promise immediate results. A united front would significantly diminish Russia’s export capacity, depriving the Kremlin of billions in revenue and reinforcing sanctions as a credible diplomatic instrument—while simultaneously delivering a strong message of trans-Atlantic unity at a time when Moscow is banking on Western disunity.
While shadow fleet sanctions are not a panacea, they represent a practical and realistic approach to bolstering sanctions credibility. To enhance the effectiveness of the price cap—the cornerstone of Western measures against Russia—it must be enforced more rigorously, with maritime insurers mandated to verify bank invoices rather than relying solely on the declarations of ship operators. The United States and the EU have numerous avenues to align their efforts, including addressing the refining loophole, where both regions import products from refineries utilizing Russian crude.
In the most recent EU sanctions package against Russia, announced last week, 118 new vessels were designated. However, this action alone is insufficient. The United States and Europe must urgently collaborate on tackling the shadow fleet before it operates even further beyond their reach.
