Toughest Sanctions Yet: US Targets Russia’s Energy Sector and Shadow Fleet

On January 10, the Biden administration unveiled its most extensive sanctions package to date, targeting Russia's energy sector.

The administration described the new sanctions as the toughest yet on Russia’s oil and liquefied natural gas sectors. Officials said these measures could cost its economy billions of dollars per month.

The new sanctions target oil producers, tankers, intermediaries, traders, ports, and Russian energy officials. More than 180 oil tankers, suspected of being part of the shadow fleet  used by the Kremlin to evade oil sanctions, are also under sanction. They also include traders, oilfield service companies, and Russian energy officials.

“The United States is taking sweeping action against Russia’s key source of revenue for funding its brutal and illegal war against Ukraine,” Treasury Secretary Janet Yellen said in a statement.

“With today’s actions, we are ratcheting up the sanctions risk associated with Russia’s oil trade, including shipping and financial facilitation in support of Russia’s oil exports.”

Friday’s action builds on US sanctions imposed in November, which targeted banks such as Gazprombank, Russia’s main channel for global energy trade, as well as earlier measures against dozens of tankers transporting Russian oil.

The Biden administration credits the November sanctions with driving the ruble to its weakest point since the start of the invasion and forcing Russia’s central bank to hike its policy rate to a record high of over 20%.

"We expect our direct targeting of the energy sector will aggravate these pressures on the Russian economy that have already pushed up inflation to almost 10% and reinforce a bleak economic outlook for 2025 and beyond," a Biden administration official said.

On January 8, it was reported that Russia’s economic forecast for 2025 reveals challenges, signaling the onset of a tough period of adjustment after years of war-driven growth.