In the final days of Joe Biden’s presidency, the United States and the United Kingdom announced a robust set of sanctions targeting Russia’s oil and gas sector. The measures, which focus on two of Russia’s largest energy companies, Gazprom and Surgutneftegas, also extend to the country’s so-called “shadow fleet” of tankers used to circumvent existing Western sanctions.
Targeting the Shadow Fleet
The sanctions aim to undermine a sophisticated system Russia has developed over the past three years to bypass restrictions imposed on its energy exports following its 2022 invasion of Ukraine. By chartering tankers registered under flags of convenience in various countries, Russia has managed to continue exporting oil, often at discounted rates, to a wide range of buyers, including major economies on the Global South.
This shadow fleet has allowed Russia to maintain substantial oil revenues, despite Western efforts to curb its energy trade. These revenues have been a lifeline for the Kremlin, enabling it to sustain military operations in Ukraine and fund its broader geopolitical ambitions.
Oil Prices and Russian Aggression
Historically, Russia’s foreign and domestic policies have been closely tied to oil prices. When oil prices fall, the Kremlin often faces financial strain, leading to concessions with Western nations and a focus on internal stability. Conversely, high oil prices have historically emboldened Moscow, fuelling expansionist policies and military aggression.
The Putin era, often characterised by elevated oil prices, has seen Russia pursue its most aggressive territorial ambitions. The annexation of Crimea in 2014 and the full-scale invasion of Ukraine in 2022 are prime examples of how energy revenues underpin the Kremlin’s imperialist objectives. By contrast, Boris Yeltsin’s presidency in the 1990s, a period of low oil prices, was marked by internal challenges, including the threat of regional separatism within Russia itself.
Impact of Sanctions
The latest sanctions not only target Gazprom and Surgutneftegas but also aim to dismantle the infrastructure enabling Russia’s shadow fleet operations. This includes financial restrictions on shipowners and operators associated with transporting Russian oil, as well as measures to close insurance loopholes exploited by these entities.
However, the effectiveness of these sanctions will depend heavily on the response of major oil-importing nations, particularly China and India. Both countries have been pivotal in sustaining Russia’s energy trade by signing large-scale agreements for oil imports, often facilitated by the shadow fleet. Their continued willingness to purchase Russian oil will determine the long-term impact of these measures.
A Test for Trump’s Presidency
As Donald Trump prepares to take office, questions loom over the future of these sanctions. Trump’s previous admiration for Vladimir Putin and his often-criticised stance on Russia have raised concerns about whether his administration will uphold or dismantle Biden’s measures.
Trump faces a critical decision: to intensify pressure on Moscow by maintaining or even expanding sanctions or to pursue rapprochement with Putin, potentially lifting restrictions in exchange for diplomatic concessions.
If Trump chooses the latter path, it may embolden Russia, undermining the sanctions’ intent and potentially prolonging the war in Ukraine. On the other hand, maintaining the current pressure could force Moscow into a position of financial strain, compelling it to reconsider its foreign policy objectives.
Energy Dependency and Geopolitical Implications
The reliance of Western countries on Russian energy supplies has been a longstanding strategic vulnerability. Moscow has often exploited this dependency, interpreting energy partnerships as tacit approval for its actions on the international stage. This dynamic was evident during the Nord Stream 2 pipeline debates and remains a critical factor in Europe’s energy security policies.
The latest sanctions introduced by the US and UK represent a significant escalation in efforts to curtail Russia’s ability to finance its war in Ukraine. However, their success will hinge on sustained international cooperation and the policies of the incoming Trump administration.
The Kremlin’s reliance on oil and gas revenues has long been central to its domestic stability and foreign policy aggression. By targeting this critical sector, the West is sending a clear message that Russia cannot sustain its imperialist ambitions without facing severe economic consequences.
Ultimately, the effectiveness of these measures will depend on whether they can close the loopholes that have allowed Moscow to evade sanctions thus far. For Donald Trump, the challenge will be to balance geopolitical strategy with his own administration’s priorities, shaping not only US-Russia relations but also the trajectory of the ongoing war in Ukraine.
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