Western governments are again looking for ways to cut the oil revenues that finance Russia’s war against Ukraine.
The EU and G7 are discussing whether to scrap the existing price cap and move to a broad ban on maritime services for Russian oil, which would bar Western shipping, insurance and other support from the trade. Reuters reports that such a measure is under consideration for an EU sanctions package in early 2026, and would represent the most far-reaching attempt yet to restrict the logistics of Russian exports.
At the same time, Ukraine has opened a new front at sea. Naval drones have struck tankers linked to Russia’s “shadow fleet” off the Turkish coast and in the Black Sea, including the sanctioned vessel Kairos, which subsequently ran aground in Bulgarian waters. These attacks have prompted Moscow to threaten to cut Ukraine off from the sea and have contributed to higher war-risk premia for voyages to Russian ports.
So far, however, the data suggest that sanctions have done more to compress Russia’s earnings per barrel than to reduce export volumes. The International Energy Agency (IEA) estimates that Russian oil exports averaged roughly 7–7.5 million barrels per day between 2022 and 2024, with crude volumes in 2022 actually higher than in 2021 as flows were redirected from Europe to Asia. In effect, the destination of Russian oil has changed, but the total volume exported has remained broadly resilient.
The picture is different on revenue. The IEA has repeatedly noted that Russia’s monthly oil export takings are sensitive to both benchmark prices and discounts. The Centre for Research on Energy and Clean Air (CREA) calculates that Russia’s fossil fuel export income has declined compared with the first year of the full-scale invasion, and that stricter enforcement of the existing cap would already have cut export revenues by about 8 per cent between December 2022 and December 2024. More recent CREA work suggests that a cap of US$45 per barrel, if applied rigorously, would have reduced Russian oil revenues by 27 per cent in May 2025 alone, with an even larger impact at US$30.
Several structural factors are at work. First, the global price environment has softened as non-OPEC+ supply has expanded and expectations of demand growth have moderated. IEA Oil Market Reports through 2023–24 revised down demand growth and pointed to looser market balances. Banks including J.P. Morgan have warned that, in a scenario of persistent oversupply, benchmark Brent prices could fall towards US$50 per barrel by the middle of the decade and possibly into the US$30s thereafter, posing obvious risks for higher-cost producers.
Secondly, Russia must sell at a discount to clear its barrels. With the EU embargo and G7 cap in place, a large share of seaborne exports now moves on an ageing and opaque “shadow fleet” of tankers. The European Parliament has condemned the involvement of European shipowners in this trade and called for stronger action against flag-hopping and shell ownership. Estimates collected by the European External Action Service (EEAS) suggest that between 600 and 1,400 ships may now form part of this fleet globally, with more than 400 vessels already sanctioned.
Thirdly, costs inside Russia are rising. As production shifts away from mature, low-cost fields towards more complex reservoirs in harsher climates, upstream capital and operating expenditure has increased. Analysis by independent researchers suggests that full-cycle costs for many newer Russian projects exceed US$40–45 per barrel once exploration, infrastructure, long-distance transport and domestic “administrative” costs are included. When the rouble is relatively strong, this further squeezes profits and tax receipts in rouble terms.
The enforcement gap at sea remains wide. While hundreds of vessels are thought to be carrying Russian crude and products outside the price cap system, only a limited number have been interdicted or formally listed for sanctions breaches. Lawyers have already warned that the EU’s proposed maritime declaration, which would allow pre-authorised boardings of shadow fleet vessels under bilateral flag-state agreements, could face legal challenges under the UN Convention on the Law of the Sea.
Ukrainian drone strikes add a further layer of risk, particularly in the Black Sea and eastern Mediterranean, but so far they have affected only a small proportion of the tanker traffic involved in Russian oil exports. Insurers have responded with higher war-risk premia for calls at Russian ports, but these increases remain manageable for most trades and have not produced a sustained drop in flows.
Technology sanctions and Russia’s own tightening of internet controls could create longer-term constraints. Western oilfield service firms and software providers have withdrawn from many upstream projects, limiting access to advanced geophysical analysis, reservoir modelling and drilling technology. At the same time, Moscow has been expanding digital censorship and intermittently restricting access to foreign platforms and virtual private networks, complicating cooperation with overseas partners even where it is still legally possible.
Taken together, these developments point to a clear conclusion: current measures have mainly reduced the income Russia earns per barrel, rather than the number of barrels exported. CREA’s modelling shows that a substantially lower, rigorously enforced cap – in the range of US$30–45 per barrel – would have cut Russia’s oil export revenues far more sharply than the regime applied to date. As EU and G7 policymakers weigh a shift from price caps to a maritime services ban, the focus is likely to remain on lowering the revenue Russia can derive from each barrel sold, while Ukraine continues to impose its own costs on Russia’s oil logistics through targeted strikes at sea.
