April 04, 2024

Sanctions by The Numbers: The Russian Energy Sector

Since 2014, the United States, the European Union (EU), and other like-minded nations have targeted the Russian energy sector with increasingly significant coercive economic measures to restrict one of the Kremlin’s largest revenue sources while mitigating global price and supply shocks. In response to Russia’s 2014 invasion of Crimea and the Donbas region, the United States issued waves of sanctions targeting the Russian energy sector. U.S. sanctions have significantly escalated over the past nine years, while the EU issued minimal sanctions in 2014 and resumed implementing expansive sanctions in correlation with the 2022 invasion of Ukraine.

This installment of the Center for a New American Security (CNAS) Sanctions by The Numbers series examines the coercive economic measures, including sanctions, export controls, and price caps, that the United States and European Union implemented to curb future revenue from the Russian oil, gas, minerals and mining, and nuclear sectors from July 2014 to December 2023. First, it discusses the diverging, and at times conflicting, U.S. and EU financial responses targeting the Russian energy sector after the 2014 invasion of Crimea. Next, it analyzes U.S. financial measures targeting the Russian energy sector following the 2022 invasion of Ukraine, then offers a comparative analysis of EU measures during this period. Finally, this installment offers insights as to what future shifts to the global energy market U.S. and EU policymakers could anticipate amid unabated fighting in Ukraine. The authors assess the oil and gas, minerals and mining, and nuclear sectors in each of these sections.

Major Takeaways

  • The United States and European Union began imposing significant sanctions on Russia’s energy sector in 2014. However, both the legacy and new sanctions have largely left Russia’s ability to maintain current upstream production and supply global markets untouched.
  • Russia remains a top global energy provider across gas, oil, and select minerals and mining operations, though U.S. and EU sanctions are designed to degrade its production abilities over time by limiting investments or access to equipment.
  • The United States and European Union remain reliant on Russian civilian nuclear energy and have limited financial tools to safely degrade this revenue source. Russia has maintained its dominant role in uranium and enrichment services globally.

Diverging U.S. and EU Approaches to Targeting Russian Energy Production after the 2014 Annexation of Crimea

After Russia invaded Crimea in 2014, the United States substantially targeted major entities operating in the Russian energy sector to reduce one of the Kremlin’s largest revenue sources; however, these measures did not substantially shift European Union energy consumption, halt the construction of Nord Stream 2, or minimize Russian financial gains. In July 2014, the United States and the EU banned the provision of critical technologies and equipment required by the Russian oil sector, including those enabling deepwater and Arctic oil exploration and production and shale oil projects in Russia. This legislation was later expanded in the United States to include ventures with sanctioned Russian entities outside of Russia, in which the entities have at least a 33 percent stake. These actions were designed to cut Russia’s future energy production capabilities, including in nascent oil production methods, without targeting current production, which primarily utilized traditional onshore oil wells.

By September 2014, Western powers strengthened restrictions on Russia’s energy sector, with the United States prohibiting investment in long-term debt and equity of six—and the EU of three—leading Russian energy companies. The United States and EU also implemented a series of sanctions on individuals and entities in the Russian energy sector, including the heads of major Russian energy companies. These sanctions included asset freezes and travel bans on sanctioned individuals. Additionally, the United States placed six major companies—Gazprom, Rosneft Oil Company, Novatek, Lukoil, Surgutneftegas, and Transneft—on the Sectoral Sanctions Identifications (SSI) List. An SSI listing is at the lower end of the U.S. sanctions escalation ladder because it does not fully block the target from U.S. dollar–based financial services and instead solely prohibits U.S. persons from “transacting in, providing financing for, or otherwise dealing in debt of specified tenors or equity if that debt or equity was or is issued on or after the relevant sanctions effective date” by, for the benefit of, or on the behalf of persons operating in Russia’s financial and energy sectors named under Directive 1 and Directive 2 of Executive Order 13662. While an SSI listing prohibits U.S. persons from engaging in new debt and new equity with designated entities, a Specially Designated Nationals (SDN) listing prohibits “engaging in any transactions with SDNs and [requires U.S. persons to] block any property in their possession or under their control in which an SDN has an interest.” Although entities on the SSI List can also appear on the SDN List, these two lists are independent and restrict different levels of financial activity. Of the targeted companies, only Gazprom and Surgutneftegas published statements in response to these sanctions, while Lukoil, Novatek, Rosneft, and Transneft did not publicly acknowledge increased restrictions.

From 2014 to 2022, the United States and Europe remained divided on what financial sanctions to impose to target Russian pipelines providing natural gas to Europe. In addition to difficulties in aligning transatlantic policy, U.S. and EU policymakers also struggled to reach a consensus internally. Since 2010, Russia used Nord Stream 1, owned by Gazprom, as the primary means of exporting natural gas to Europe. Beginning in 2011, EU member states championed the approval of Gazprom’s Nord Stream 2 pipeline to bolster EU energy security and expand Russia’s export volume of natural gas. Germany was a staunch supporter of the pipeline, partly because many German politicians promoted the theory that increased economic interdependence between Europe and Russia would bolster peace. By 2015, Gazprom, with the support of five EU companies as lenders, officially launched the Nord Stream 2 project; however, construction did not start until 2018 due to legal objections from some EU member states and ambiguity of U.S. sanction policy.

Diplomatic tensions rose within the transatlantic alliance as the U.S. Congress mandated progressively stringent sanctions on Russia’s energy export pipelines. In August 2017, the United States passed the Countering America’s Adversaries Through Sanctions Act (CAATSA), which authorized sanctions on persons involved in the construction of new Russian energy pipelines. To de-escalate transatlantic tensions, the Department of State issued additional guidance in November 2018, clarifying that CAATSA sanctions applied to “persons determined to have knowingly engaged in a significant transaction, on or after the date the Act was enacted, with a person that is part of or operating for or on behalf of the defense or intelligence sectors of the Government of the Russian Federation,” effectively exempting the Nord Stream 2 pipeline because the project was underway before the enactment of CAASTA. Companies enthusiastically responded and rapidly began pipe-laying after the Department of State issued updated guidance.

The United States and European Union began imposing significant sanctions on Russia’s energy sector in 2014. However, both the legacy and new sanctions have largely left Russia’s ability to maintain current upstream production and supply global markets untouched.

However, the United States became increasingly wary of the potential for the Kremlin to weaponize energy as Europe increased its dependence on Russian sources. In December 2019, the Protecting Europe’s Energy Security Act (PEESA) was included in the National Defense Authorization Act for 2020. Under PEESA, any foreign person “knowingly, on or after the date of the enactment of this Act, [who] sells, leases, or provides pipe-laying vessels for the construction of any Russian-origin energy export pipeline that makes landfall in Germany or Turkey” is subjected to sanctions. In July 2020, the Department of State updated its guidance to subject Nord Stream 2 to CAATSA sanctions and Congress amended PEESA in January 2021 to expand the definition of pipeline activities subjected to sanctions, adding persons who provide insurance, underwriting, or installation services. The Trump and Biden administrations used CAATSA and PEESA authorities to sanction roughly 20 vessels and 10 persons for their support in building or financing Nord Stream 2 and TurkStream, another Russian pipeline.

While U.S. policymakers imposed CAATSA and PEESA sanctions partly to protect European energy security, the multiple sanctions, waivers, and amendments issued throughout intermittent pipe-laying construction resulted in an inconsistent U.S. policy toward the Russian energy sector. In addition to mixed U.S. policy alternately halting and permitting Nord Stream 2 construction, transatlantic and European Union policy lacked cohesion—all of which resulted in slowing Russian progress in building the pipeline as associated European insurance and construction firms became wary of participating. Nevertheless, pipe-laying resumed in February 2021 and the United States responded by sanctioning several vessels and granting a waiver to Nord Stream 2 AG, the parent company laying the pipeline, and Nord Stream CEO Matthias Warnig. This continued mix of sanctions and waivers demonstrates the difficulty Washington had in identifying policy options that resolutely condemned Russia while also supporting EU allies. U.S. policymakers likely saw efforts to halt Nord Stream 2 construction as fruitless and issued waivers that allowed construction to heal transatlantic relations.

Germany was one of the European Union’s strongest supporters of the pipeline and criticized U.S. actions as overreaching, but this policy stance shifted after the 2022 Russian invasion of Ukraine. Even before that, German energy regulators suspended the certification of Nord Stream 2 in November 2021, citing that the German subsidiary that Gazprom established to own and operate the pipeline did not “fulfil the requirements of an independent transmission operator,” and halted operations until the “main assets and human resources have been transferred to the subsidiary,” seemingly aiding in the alignment of U.S. and EU policy.

U.S. Financial Measures Targeting Russia after Its 2022 Invasion of Ukraine

Starting in February 2022, the United States and a coalition of 45 allies and partners deployed a versatile set of coercive financial tools to extend the 2014 financial measures targeting the Russian energy sector. These measures included actions to target natural gas, crude and refined oil, nuclear materials, metals and mining, and the financial services that facilitate these operations, such as accounting, trust and corporate formation, and investment. Since Russia’s 2022 invasion of Ukraine, U.S. policymakers have levied sanctions, tariffs, export controls, and price caps designed to degrade the Russian economy’s capacity to fund continued aggression while preserving global energy availability.

While U.S. policymakers emphasized the importance of reducing Russian revenue from its energy sector, the significant role Russia plays in the global energy market as a major provider of oil, gas, minerals and mining, and nuclear materials limited available policy options. The United States had little room to increase the severity of existing sanctions or designate new entities in the energy sector since these measures could cause a shock to the global energy market—including inflicting financial burdens on U.S. consumers. Additionally, consecutive U.S. presidents targeted some of the largest Russian energy entities after Russia’s 2014 incursion of Crimea, with designations tapering off in 2017, potentially indicating a fear that financially isolating major Russian energy entities could increase energy insecurity or inflict significant economic damage to U.S. allies and partners.

Since the 2022 invasion, Gazprom is the only entity the Biden administration has placed on the Non-SDN Menu-Based Sanctions List (NS-MBS List), elevating its 2014 SSI designation. Gazprom did not publicly respond to the escalation of its sanction status. The remainder of the entities listed in 2014 maintained their SSI designation, remaining at a lower sanction threshold. The NS-MBS List sanctions are “less than full blocking sanctions, and may include, among other things, non-blocking prohibitions on the provision of certain goods or services and blocking prohibitions subject to a statutory exception for the importation of goods.” Treasury also added several Gazprom and Rosneft executives to the SDN List, and it continues to target the network of oligarchs connected to the energy sector. While U.S. policymakers want to deprive the Kremlin of revenue, degrade Russian warfighting capabilities, and diminish Russia’s ability to seize land from Ukraine, the United States does not want to over-sanction the energy sector and jeopardize energy stability, particularly for U.S. and EU consumers as well as emerging markets that continue to rely on Russian coal, liquefied natural gas (LNG), oil, and nuclear energy.

Oil and Gas Sectors

The United States was one of the first countries to lead the global shift away from Russian energy products, a move it could make because Russian oil comprised only a small percentage of the U.S. market, especially compared to the EU. One day before the full-scale Russian invasion of Ukraine, President Joe Biden “terminated the waiver and imposed sanctions on Nord Stream 2 AG (NS2AG), its CEO Matthias Warnig, and NS2AG’s corporate officers,” in coordination with Germany and the EU, to limit Russia’s ability to use the pipeline as a geopolitical tool. Additionally, Biden signed an executive order banning imports of Russian coal, LNG, and oil, and prohibiting new investment by U.S. persons in Russia’s energy sector less than one month after the invasion of Ukraine. To minimize price and quantity shocks for nations still dependent on Russian sources, the Biden administration exempted processing energy payments by U.S. financial institutions from the financial sanctions since most of this trade is denominated in dollars or touches the U.S. financial system as part of the transactions. The Department of Commerce also expanded the 2014 prohibitions on the export of oil and gas equipment to Russia. The updated rule prohibits the export of oil and gas equipment regardless of the intended end use and heightens U.S. policy for reviewing these license applications from a “presumption of denial” to a “policy of denial,” meaning that Commerce would deny all such license applications absent a significant foreign policy reason.

In December 2022, the United States, EU, G7, and Australia formed the Price Cap Coalition to implement a series of price caps meant to keep global energy markets supplied while limiting Russia’s revenues. This includes a cap of $60/barrel for Russian crude oil, which took effect on December 5, 2022; a cap of $100/barrel for refined products that trade at a premium to crude, such as diesel; and a cap of $45/barrel for products that trade at a discount, such as fuel oil and naphtha. The caps on refined oil products took effect on February 5, 2023. The cap corresponds to an EU ban on importing seaborne Russian crude oil (effective December 2022) and petroleum products (effective February 2023) into the EU, and to similar restrictions on the use of EU services to facilitate trade with third countries. EU member states are still permitted to import Russian oil via pipeline given the reliance by some European countries on this source, though they are actively looking to diversify energy sources. The price cap was designed to lessen the fallout on the global economy and energy consumers of the EU embargo—aiming to set a lower price of revenues for Russia while avoiding a major supply shock.

The U.S. Treasury Department announced that “the price cap policy allows services providers in the Coalition to participate in trade of seaborne Russian-origin oil to third countries only if the oil is traded below the cap—and provides importers outside the Coalition with the leverage to negotiate heavy discounts on Russian oil.” Most of the major shipping firms and shipping insurance firms are based within Coalition countries, providing them with maximum enforcement capacity through regulation in their domains. This innovative financial tool also allows the coalition to meet its dual goals of reducing Russian revenue to fuel its war in Ukraine and supporting energy market stability by providing low- and middle-income countries most affected by the economic blowback of the war with bargaining power to secure discounted energy. The price caps are periodically reviewed to see if prices need to be adjusted for market dynamics.

While the price cap has lowered Russian oil export earnings by an estimated 14 percent within the first year of its passage, the Coalition faces challenges in enforcement, with ghost fleets and widespread violations weakening the intended chilling effect of the measure. A two-tier global shipping market began to emerge in the months after policymakers issued the price cap, which is divided by vessels using Western services for legal oil shipments and ones using ghost fleets—comprising vessels past their traditional lifespans—for illicit oil shipments. Data indicate that violations of the price cap by G7 countries are primarily due to falsification of records by the buyer. As the G7 enhances price cap enforcement mechanisms, Western service providers will likely be increasingly deterred from facilitating shipment of Russian oil due to increasing compliance measures, costs, and risks. This phenomenon could result in increased demand for ghost fleets.

The U.S. government issued over 200 designations on November 2, 2023, primarily to constrain Russia’s warfighting capabilities and future energy production and export capacity. One of the most notable energy sector entities sanctioned was the Limited Liability Company Arctic LNG 2, the operator of the Arctic LNG 2 project, set to expand Russia’s share of the global LNG market and start production in early 2024. The company has not publicly acknowledged this sanction listing. Novatek, which is the largest LNG producer in Russia and was first placed on the SSI List in 2016, has a 60 percent stake in the project. This round of sanctions in November represents an escalation of sanctions since they explicitly target future Russian revenue from the gas sector, though the United States continues to be careful in avoiding sanctions that could overly impact Russia’s ability to engage in current production, to avoid shocks to the energy markets.

To continue elevating prior financial measures, OFAC sanctioned influential entities and individuals connected to Russian energy educational institutions, energy-related research institutes, drilling and mining companies, and businesses that attract and advise on investment in the Russian energy sector in May 2023, following commitments made by G7 leaders at a summit in Japan. These new sanctions greatly expand the scope of entities targeted by the United States. The U.S. government escalated sanctions on industries that support future energy capabilities, with designations targeting construction, joint stock, and manufacturing companies in December 2023. Policymakers issued these sanctions to further limit Russia’s future extractive capabilities and energy revenue and to discourage third countries that might be interested in investing in assets in Russia.

Mining and Metals Sectors

U.S. and EU policymakers were slower to impose financial sanctions on the Russian metals and mining sectors compared to the oil and gas sectors. The first financial measures came in April 2022, when OFAC sanctioned Alrosa, a Russian state-owned company that accounted for 28 percent of industrial and nonindustrial diamond mining. The company has not issued a response to the listing. On February 24, 2023, one year after the Russian invasion of Ukraine, OFAC, in coordination with the G7, announced new designations targeting the mining and metals sectors to further isolate the Russian Federation from the global economy and hinder Russia’s capability to financially, materially, and technologically sustain the invasion. Pursuant to Executive Order 14024, OFAC defines the mining and metal sectors as “any act, process, or industry of extracting, at the surface or underground, ores, coal, precious stones, or any other minerals or geological materials in the Russian Federation, or any act of procuring, processing, manufacturing, or refining such geological materials, or transporting them to, from, or within the Russian Federation.” The Treasury Department also announced a new determination that permits sanctions on any person operating within the Russian metals and mining sectors. Many of the primary stakeholders are currently on the sanctions list.

In early 2022, the United States, in coordination with the EU and G7, revoked Russia’s most-favored-nation (MFN) trade status at the World Trade Organization, enabling an across-the-board increase in tariffs on imported goods from Russia. Although revoking Russia’s MFN status was a powerful symbolic move, it did not result in a significant reduction of Russian exports or economic decline. Since 1930, policymakers have avoided levying high tariffs on raw materials—including energy and specialty metals and chemicals—in an effort to maintain low costs for U.S. factories. Because Russian exports primarily consist of these raw materials, the Russian economy did not take a major hit when the United States and other WTO members revoked Russia’s MFN status. In early 2023, U.S. policymakers increased tariffs on more than 100 Russian chemical products, metals, and minerals—these tariffs targeted aluminum in particular, increasing the cost of entry to the U.S. market for Russian smelted or cast aluminum by up to 270 percent due to Russia’s continued aggression in Ukraine and resilient energy and metals sales. Treasury has since built on these designations by increasing the number of entities targeted in the in the metals and mining sector, issuing waves of sanctions in July and December 2023.

Nuclear Sector

The United States and many of its partners continue to rely on Russia for uranium and enrichment services, limiting their ability to impose sanctions or export controls on the Russian nuclear industry. Nuclear trade continues to benefit from the broad general license on energy trade. In 2021, the United States purchased 14 percent of its uranium required for domestic reactors from Rosatom, the Russian state nuclear energy corporation. Additionally, Rosatom provides 28 percent of the enrichment services in the United States. Experts caution that identifying a new uranium and enrichment supplier would take years under present conditions. However, nuclear scientists have urged U.S. policymakers to decrease dependence on Russia by reopening uranium mines and increasing enrichment capacity in the United States and Canada.

Rosatom itself remains off the sanctions list, but OFAC has sanctioned several of its subsidiaries in different regions and product areas. Neither Rosatom nor its subsidiaries have issued a public response to these listings. The Treasury Department also announced over 50 additions to the SDN list in April 2023, aimed at disrupting several networks involved in sanctions evasion. Notably, the State Department introduced measures targeting the network associated with Alisher Usmanov—one of the wealthiest billionaires in Russia, with vast metals and mining investments—including entities based in Cyprus and other countries and subsidiaries of Rosatom.

EU Financial Measures Targeting Russia after Its 2022 Invasion of Ukraine

The EU is much more dependent on the Russian energy sector than the United States—with the International Energy Agency reporting that Russian gas accounted for 45 percent of EU gas imports and roughly 40 percent of its gas use in 2021—which makes it harder for EU policymakers to design biting sanctions policy. Nevertheless, the EU has taken significant steps to reduce its dependency on Russia and is substantially less reliant on Russian energy than it was before the invasion.

Oil and Gas Sectors

The German government, and many other EU governments, recognized that the geopolitical situation in Europe had fundamentally changed days before the Russian invasion of Ukraine, pushing them to align energy and security policies with the United States. On February 22, 2022, German Chancellor Olaf Scholz announced that Germany was halting the certification of the Nord Stream 2 pipeline to “punish the Kremlin for recognizing two separatist regions in Ukraine” and in hopes of mitigating a full-scale war. Shortly after Russia invaded Ukraine on February 24, 2022, the EU imposed a transaction ban covering technology transfers to Russia’s energy sector, a ban on investments for new production and exploration projects, and a blanket ban on engaging with many Russian state-owned entities, including three of the largest ones in the Russian energy sector—Rosneft, Transneft, and Gazprom—to reinforce U.S. efforts to degrade the Russian warfighting capability. None of these companies publicly responded to these EU actions. These bans allow for member state exemptions for projects necessary to ensure critical energy supply within the EU, reflecting the long-standing and complicated relationship with Russia. Several EU member states, including Germany and Poland, have nationalized Gazprom subsidiaries in-country, cutting Russian revenues and seizing the authority for decision-making on meeting energy demands.

In addition to the price cap restrictions, the EU imposed an embargo on the maritime transport of crude and refined Russian oil and petroleum products in Europe, and began phasing out Russian oil imports. This ban also prohibits access to EU ports and bunkering services (the process of refueling vessels) for tankers carrying Russian crude oil or petroleum products. In June 2023, the EU introduced additional restrictions prohibiting port access for vessels engaging in ship-to-ship transfers in cases where there is reasonable suspicion that they are violating the ban on seaborne crude oil and oil product imports from Russia. The European Union and United Kingdom play essential roles in implementing and enforcing the price cap because they are home to most bunkering and insurance services in the maritime industry.

EU policymakers also prohibited Russian nationals and entities from booking gas storage capacity in the Union, except for LNG, to limit Russia’s ability to manipulate the gas market. While the EU has not sanctioned the import of Russian gas due to continued reliance among some member states on gas received from Russia, countries are motivated to seek alternative sources or reduce energy consumption. For example, in 2021, the EU imported 83 percent of its total LNG. Roughly 50 percent of these imports were from Russia before the 2022 invasion. By November 2022, Russian gas imports made up less than 25 percent of EU gas imports. This decrease reflects Russia’s decision to sharply reduce and then stop transit of gas to the EU, after buyers did not want to pay in rubles. Much of the gas that the EU continues to import is liquefied, with Spain and the Netherlands serving as the largest import hubs. Overarching bans on imports are unlikely, but national authorities and the EU energy commissioner have urged companies to avoid new contracts with Russian-linked providers. The EU has also introduced several tools to help companies, especially small ones, identify and fulfill gas volumes without over competing with one another. In December 2023, the European Union adopted its 12th package of sanctions against Russia, which included enhanced monitoring and attestation requirements agreed by the G7 (and also implemented by the U.S. government that same month) to stem the growing Russian shadow fleet related to the price cap. The EU also implemented a ban on the import of liquified petroleum gas.

Metals and Mining Sectors

Although early trade restrictions targeting the Russian energy sector exempted the transport of fossil fuels, the EU eventually implemented a complete ban on purchasing or importing Russian coal or other solid fossil fuels and expanded sanctions to target additional mining sectors. These sanctions also prohibited EU operators from providing relevant services to listed entities. Notable sanctions designations in this sector include Andrei Anatolyevich Kozitsyn, co-founder and CEO of Ural Mining Metallurgical Company, a leading coal producer; and Vladimir Valerievich Rashevsky, CEO of EuroChem Group, one of the world’s largest mineral fertilizer producers. The EU also prohibited new investments and joint ventures in the Russian mining and quarrying sectors, similar to the United States. The restriction excludes mining and quarrying activities that relate to certain critical raw materials, including aluminum, chromium, cobalt, copper, iron ore, mineral fertilizers, molybdenum, nickel, palladium, and rhodium.

Nuclear Sector

Much like the United States, the European Union did not target the nuclear sector because many member states rely on Russian uranium and enrichment services for reactors throughout Europe. EU restrictions explicitly exclude civil nuclear-related activities from sanctions because Russian-origin nuclear material and knowledge are essential to maintaining public safety and energy security. Several EU restrictions, such as a ban on access to ports and road transport, explicitly exempt “nuclear industry and the downstream sector of energy transport” to ensure continued access to these traded goods and services. The investment restriction also includes exemptions for the nuclear industry and transport of nuclear fuel.

Looking Toward Future Shifts in the Energy Market

U.S. and EU coercive financial measures will shape the oil sector of the Russian energy market and leave a lasting influence on Western and Russian economies and policy priorities. Western policymakers will have a harder time designing financial tools to hit the gas, metals, and mining sectors without damaging global markets and energy supply.

Oil and Gas Sectors

While U.S. policymakers have boasted about the efficacy of current sanctions regimes targeting the Russian oil industry, the level of success is difficult to measure. Current financial measures, like the EU oil embargo and G7 price cap, have been nominally successful at restricting Russia’s fiscal revenues. While Russia’s total oil revenues have fallen, a global appetite for a steady supply of oil and low prices have helped Russia identify alternative buyers, allowing it to bounce back to, and modestly exceed, prewar levels of production. While it is too early to make a full assessment of the efficacy of individual sanctions policies on the Russian oil industry, numerous negative implications of these measures are already evident.

Western desires to balance domestic and global interests could signal a lack of commitment to financially punishing Moscow. The transatlantic partners have aimed to inflict maximum harm on the Russian economy while simultaneously insulating themselves from adverse effects of rising energy insecurity and oil prices. The United States and European Union prioritize preventing a global oil shortage or price spike over utilizing the full extent of financial tools available to completely cut the Kremlin’s revenue stream. This stance may stem from the belief that rising energy costs could weaken Western resolve to support Ukraine financially and militarily. This policy allows Moscow to leverage its position in the global oil market, identify alternative buyers, and continue funding its war in Ukraine amid U.S. and EU hesitancy to expand the sanctions regime on the Russian oil industry.

Russia will continue to find licit and illicit ways to sell energy goods despite Western sanctions. Russia is using its eastern ports, such as Kozmino, to circumnavigate price cap measures and increase its exports of oil and petroleum products to alternative buyers, including China and India. It is still legal to sell above the cap if buyers do not use G7 services—such as insurance, bunkering, or shipping—making it difficult for the transatlantic coalition to enforce the price cap because oil tankers have a substantial economic incentive to engage in illicit oil sales—going so far as to turn off transponders to evade detection. A Russian shadow fleet consisting of an estimated 443 tankers has formed since the price cap took into effect, seeking to “transport Russian oil at [as] close to capacity as possible while potentially evading G7 sanctions and the crude and refined oil price caps.” There is a need for enhanced reporting and information-sharing mechanisms among G7 members and partners to combat sanctions evasion.

The United States and European Union are unlikely to implement significantly stricter financial measures on Russian oil industries. History has proved that Russia will identify new evasion methods to mitigate the effects of sanctions. The United States and European Union must continue to collaborate and implement new, creative sanctions on the Russian oil sector to degrade the country’s economy and warfighting ability. Washington has vetoed multilateral measures to lower the price cap from its current level and impose secondary or blocking sanctions on the Russian energy sector, reflecting the difficulty in further energy sector escalation.

Mining and Metals Sectors

Sanctions on the mining and metals sectors represent a substantial shift in Western policy from the pre-2022 invasion period and affect numerous Russian industries. The financial measures implemented in 2023 enable OFAC to subject any company or individual in the mining and metals sectors to the SDN list. Western firms with ties to Russian mineral sectors will face increasing pressure under escalating sanctions. The sanctions on Russia’s mining and metals sectors could affect any company doing business with the Russian mining or metal industries, along with mining companies that export equipment to Russia. These policies could severely hinder Russia’s ability to acquire the necessary equipment to continue mining critical minerals such as cobalt and copper.

Nuclear Sector

The Russian nuclear sector remains relatively untouched by Western sanctions. The West is heavily reliant on Russian nuclear energy inputs—namely enriched uranium as well as conversion and enrichment services. This dependence on Russian nuclear components creates dangerous implications for the Western coalition and its energy markets.

Moscow will retain the ability to exploit Western nuclear vulnerability. Russia understands that without viable alternatives, Western countries will continue to import its enriched uranium—rendering the West more vulnerable to Russian coercion and potentially dampening the effectiveness of future sanction packages. Moscow could exploit this dependency to reciprocate against other sanctions imposed by the West, as it has previously attempted to suspend LNG production in retaliation for Western sanctions.

Russian nuclear companies will likely continue to engage in illicit activities. Companies such as Rosatom—which has ties to the Russian occupation of the Zaporizhzhia nuclear plant in Ukraine and faces accusations of providing military equipment to Russian forces—are not included in sanctions regimes due to Western reliance on the Russian nuclear sector. Given that these companies are yet to face consequences for their support for the Russian war effort, they will likely feel emboldened to continue such illicit activities going forward.

The West may prioritize increased investment in energy alternatives to diminish the strong role Russia plays in the global energy market, particularly the oil, gas, and nuclear sectors. While European countries have successfully pivoted away from dependency on Russian coal and natural gas, a shift from nuclear reliance would take years and require significant investment. The West will likely seek to identify alternative suppliers and invest in new technologies to lessen its dependency on Russia in the long term. These investments could shape the Euro-Atlantic energy landscape in the future.


The United States recognized the threat that Russia poses to global security and energy when it invaded Crimea in 2014, with the EU only more gradually perceiving the Kremlin’s potential to weaponize energy. Since the 2014 invasion, the United States has worked with the European Union and other like-minded countries to escalate financial measures aimed at reducing the Kremlin’s profits from the energy sector. Financial tools first included sanctions and then expanded to include export controls and more novel measures like price caps. These measures must be delicately balanced to meet the twin goals of economically impairing Russia while maintaining a reliable global energy supply. It is highly likely that the United States and European Union will continue to coordinate and escalate financial measures to impede Russia’s warfighting capability in Ukraine so long as the Kremlin maintains its aggression.


Designations were drawn from the following U.S. sanctions programs: Countering America’s Adversaries Through Sanctions Act” (Public Law 115-44) (CAATSA), Protecting Europe’s Energy Security Act of 2019 (“PEESA” or “the Act,” Title LXXV, National Defense Authorization Act for Fiscal Year 2020, Pub. L. No. 116-92), as amended on January 1, 2021, by the National Defense Authorization Act for FY2021 (FY2021 NDAA), Pub. L. 116-283, PEESA (Sec. 7503 of FY2020 NDAA), as amended (by FY2021 NDAA Sec. 1242, RUSSIA-EO14024, UKRAINE-EO13661, and UKRAINE-EO13662 as well as “EU Council Regulation No 833/2014 of 31 July 2014” and applicable amendments up to “Council Regulation (EU) No 2023/427 of 25 February 2023.” Designations included in the graphic feature Treasury Department designations.

Where possible, the authors reviewed statements from sanctioned companies expressing their view on the sanction. Companies that issued statements in response to the sanctions include Gazprom and Surgutneftegas.

About the Authors

Jocelyn Trainer was a Research Assistant for the Energy, Economics, and Security Program at CNAS. She analyzes developments and trends in sanctions policy and evasion tactics, illicit financial crime, and efforts to combat corruption and human rights abuses, focusing on sub-Saharan Africa, particularly the Horn of Africa. She also researches the nexus between climate change, energy, and national security to inform cross-sectional policy. Trainer led research and writing for the CNAS Sanctions by The Numbers series.

Nicholas Lokker is a Research Associate for the Transatlantic Security Program at CNAS. His work focuses on the politics of European integration and security, Russian foreign policy, and transatlantic relations. Lokker has prior experience researching transatlantic geopolitics at the Center for European Policy Analysis, the European Parliamentary Research Service, and the American Institute for Contemporary German Studies. He also spent a year teaching English in Clermont-Ferrand, France.

Uliana Certan was the Joseph S. Nye, Jr. Intern for the Energy, Economics, and Security Program at CNAS. Certan graduated from Brandeis University, where she earned a BA with a triple major in international global studies, economics, and politics. She also completed the General Course program at the London School of Economics, where she studied international security, international political economy, international institutions, and strategic aspects of international relations.

Kristen Taylor was the Joseph S. Nye, Jr. Intern for the Transatlantic Security Program at CNAS. Before joining CNAS, Taylor held internships at the Atlantic Council, the National Association of Development Organizations, and the U.S. Department of State. She also conducted research for the Czech government on Ukrainian refugee resettlement through the Masaryk Diplomatic Program. Taylor has an MA in global governance, politics, and security from American University, with a focus on migration and European affairs. She holds a BA in political science, a BA in public relations, and a BA in public and urban affairs from Virginia Tech.


The authors would like to thank CNAS Program Directors Andrea Kendall-Taylor and Emily Kilcrease, and CNAS Adjunct Senior Fellows John Hughes and Rachel Ziemba, for their contributions to and review of this report. The authors would also like to acknowledge the CNAS Communications and Publications Teams for their support, design, and edits. This report was made possible by general support to CNAS.

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