US Lawmaker, Foreign Ambassadors Call for More US Sanctions on Russian Shadow Fleet

Whitehouse called for the administration to be much more "aggressive" in targeting both vessels moving Russian oil and companies violating the global price cap on Russian energy. He noted that the Trump administration recently seized a sanctioned oil tanker off the coast of Venezuela and questioned why the U.S. hasn’t taken similar actions against boats aiding Moscow.

“If they can seize the Venezuelan oil tanker, why not seize a Russian one?” Whitehouse said. “I bet you can find a lot more illegitimacy around some of the Russian shadow fleet tankers than around the Venezuelan tanker.”

He added that oil revenue is “propping up” the Russian economy and said the U.S. should be doing more to track and target shadow fleet ships that are hiding their location on the open seas and operating without insurance. Although the Treasury Department designated major Russian energy companies Rosneft and Lukoil in October (see 2510220050), it has not joined the EU, the U.K. and others in multiple rounds of sanctions this year targeting Russian shadow fleet vessels (see 2510230014 and 2510160021).

“I don't think we've done anywhere near the good work that we should have with respect to the shadow fleet,” Whitehouse said.

Sanctions against Russia will be effective only if the U.S. is “dynamic and engaged and aggressive,” he said. “If you are static, then the workarounds become the new pathway, and [then] it looks like sanctions are not effective. Sanctions are effective, but the enforcement of them has to be dynamic and aggressive.”

Other speakers during the event made similar points, including Simon Johnson, a professor at the Massachusetts Institute of Technology and the former chief economist and director of the research department at the International Monetary Fund. Johnson said that not only does the U.S. need to better coordinate its sanctions with the EU and other trading partners, but it also has to be “willing to incur at least some potential cost.”

He specifically said the oil price cap -- which was originally set by the U.S. and other countries at $60 per barrel in 2022 (see 2212050014) -- was “too high.” The EU and other nations have since lowered the cap on Russian crude oil to $47.60 (see 2507180017), but the U.S. has made no similar announcement.

“If the level of the cap had been set at $30 or even $20 per barrel, Russia would still have had an incentive to export its oil, since that's above the marginal cost of extraction,” Johnson said. But “its export revenue and its fiscal revenue in that lower price cap scenario would have collapsed.”

Now, he said, the effectiveness of the price cap depends on “Western ownership and control” over the global oil tanker fleet, because those Western companies are the ones that are most likely to comply with the cap. However, that has been “critically undermined” by the formation of Russia’s shadow fleet, which doesn't operate under traditional maritime laws.

“The result is that around half of all the seaborne oil now leaving Russia is on shadow fleet ships,” Johnson said. “The shadow fleet is a monster of the West's own creation, and it is a monster that is still growing.”

Multiple foreign diplomats speaking during the event also called on the Trump administration to impose more sanctions on shadow fleet vessels. Jovita Neliupsiene, EU ambassador to the U.S., said the lack of sanctions coordination is hurting the effectiveness of those measures.

“We have to remember that we can actually sanction all the shadow fleets and every ship, but [if] we don't have this enforced by others -- it's not only about the EU and the U.K.,” she said. “We need to have the U.S. on board."

Gediminas Varvuolis, Lithuania’s ambassador to the U.S., said he believes that “obviously we should sanction all of those shadow fleet tankers.” EU nations “very much” want the U.S. to “follow suit” and restart designations against those ships. “Better later than never,” he said.

Lucy Ferguson, the acting deputy head of mission at the British Embassy in the U.S., said sanctions often have their “greatest effect” when they're imposed “in concert with others.” She also alluded to comments from other event speakers who said the Russia sanctions should have been stronger from Day One of Moscow’s invasion of Ukraine.

“What we've heard is that more decisive action in this space even earlier may have affected [Russia’s] behavior earlier,” Ferguson said. “But that in itself should be a reason why we absolutely need to remain as decisive and as bold as we can be.”