Trump Admin Mulls Sanctions on Russian 'Shadow Fleet' If Moscow Doesn't Agree to Ceasefire

Trump Administration Weighing Escalatory Options Against Russia

The administration of former U.S. President Donald Trump, potentially returning to power, is considering imposing additional sanctions on Russia's so-called 'shadow fleet,' an aging and obscure collection of oil tankers used by Russia to circumvent Western sanctions imposed over its war in Ukraine. This action is being considered if Russian President Vladimir Putin does not agree to a ceasefire by Friday.

This measure, if implemented, would mark the first punitive action taken by the Trump administration against Moscow since his potential return to the White House in January. The threat is intended to increase pressure on Putin and force him back to the negotiating table to end the conflict in Ukraine.

What is Russia's 'Shadow Fleet'?

Following the outbreak of the war in Ukraine, Russia resorted to using a 'shadow fleet,' primarily composed of older oil tankers, to transport Russian oil around the world and circumvent Western restrictions. This fleet allows Russia to sell its oil at prices exceeding the price cap set by the Group of Seven (G7) nations, thereby providing financial support for its military operations.

The 'shadow fleet' is characterized by its opaque ownership and avoidance of Western services, making it difficult to impose sanctions on its owners. However, recent measures targeting the vessels themselves have proven effective.

Effectiveness of Sanctions on Vessels vs. Owners

In early 2024, the Biden administration was surprised by the effectiveness of imposing sanctions on individual vessels rather than their owners or managers. It turned out that Russian oil buyers were reluctant to deal with blacklisted ships. The European Union and the United Kingdom subsequently adopted this approach.

An analysis by the Financial Times of 115 crude oil tankers sanctioned by the United States showed that the operating efficiency of these vessels declined significantly after the sanctions were imposed. According to data from the shipping analytics platform Kpler, these vessels transported an average of 48 million barrels of Russian oil per month in the six months before being blacklisted, but this figure fell to 13 million barrels per month in the six months that followed.

Other Options Under Consideration

In addition to imposing sanctions on the 'shadow fleet,' the Trump administration is considering other options, including stricter enforcement of existing sanctions and joining the dynamic price cap mechanism for Russian oil that the European Union will begin implementing in early September. The United States could also impose secondary sanctions on banks and refineries in other countries that facilitate Russian oil trade.

Potential Impact on India

Trump has also announced plans to increase tariffs on India, a major buyer of Russian oil. He stated that India "doesn't care how many Ukrainians are killed by the Russian military machine."

Conclusion

The Trump administration appears determined to increase pressure on Russia to end its war in Ukraine. Whether these measures succeed in achieving that goal remains to be seen, but they will certainly impact the Russian economy and global oil markets.