America or Europe? Which Sanctions Are Really Hurting Russia’s Hydrocarbons Exports?

Wednesday 19 August 2026

Sanctions against Russian hydrocarbons have now been operating for sufficiently long that their effectiveness can be judged not merely by announcements from Western governments but by what has actually happened to Russian oil and gas. Four and a half years after the full-scale invasion of Ukraine, Russia remains one of the world’s largest exporters of hydrocarbons. Tankers continue to leave Primorsk, Ust-Luga and Novorossiysk; pipeline oil continues to reach parts of Central Europe; Russian liquefied natural gas still arrives at European terminals; and enormous quantities of Russian crude travel eastwards towards Asian customers.

This might suggest that sanctions have failed. That conclusion would be too simple. The purpose of the Western sanctions architecture was never universally understood to be the elimination of Russian oil from world markets. Indeed, removing several million barrels per day of Russian production altogether might have produced precisely the result Western governments wished to avoid — a spectacular increase in the world oil price that could have enriched Russia on every remaining barrel it managed to sell.

The more sophisticated objective has therefore been to permit Russian hydrocarbons to reach world markets while reducing the price Russia receives for them, increasing the cost and difficulty of transporting them, restricting Russia’s capacity to develop new production and gradually separating the Russian energy industry from Western technology, finance, shipping and insurance.

Measured against these objectives, sanctions have achieved something substantial — but considerably less than their theoretical potential.

The interesting question in August 2026 is which of the two principal Western sanctions systems is now doing more damage: that of the United States or that of the European Union. The answer has changed over time. American sanctions possess the more formidable financial weapon. European sanctions possess something America does not — geographical proximity to Russia, control over an enormous former Russian energy market and considerable influence over the maritime infrastructure through which Russian hydrocarbons move.

Increasingly, therefore, the European system appears stronger in restricting the physical Russian hydrocarbons trade, whereas the American system remains potentially more powerful in coercing the countries and companies that purchase Russian energy.

The great European divorce from Russian energy

Before February 2022, the European Union was Russia’s natural hydrocarbons customer. Geography had produced an extraordinary degree of economic integration. Pipelines connected Siberian gas fields with German industry. Russian crude travelled through the Druzhba system into Central Europe. European refineries were configured for Russian grades of oil. Russia enjoyed a wealthy customer situated immediately beside it.

That relationship represented one of Moscow’s greatest strategic assets.

It has largely been destroyed.

The EU embargo on seaborne Russian crude and petroleum products forced Russia to redirect much of its oil towards India, China, Türkiye and other markets. Russian oil did not disappear — instead it began travelling vastly greater distances.

That distinction matters.

A barrel shipped from Primorsk to Rotterdam required a comparatively short voyage. Sending approximately the same barrel to India or China ties up a tanker for much longer, increases freight and insurance costs and requires Russia to maintain substantially greater maritime capacity merely to sell the same quantity of oil.

Sanctions therefore changed the geography — and hence the economics — of the Russian oil industry.

Gas has proved still more dramatic. The old Russian-European pipeline gas relationship has effectively collapsed. Whatever political settlement eventually emerges from the Ukraine war, it is difficult to imagine European dependence upon Russian pipeline gas returning to anything resembling its pre-2022 condition.

This represents a permanent destruction of Russian economic capital. Gas pipelines are unusually inflexible assets. An oil tanker can sail somewhere else; a pipeline cannot. Infrastructure constructed over decades to supply European customers cannot simply be pointed towards China.

In this respect Europe has inflicted strategic damage upon Russia that the United States could never have achieved because America was never a sufficiently important customer for Russian hydrocarbons.

The American weapon

Yet Washington possesses another form of power — the peculiar extraterritorial influence generated by the importance of the American financial system.

The United States imposed blocking sanctions upon Rosneft and Lukoil in October 2025, together with subsidiaries in which they held qualifying interests. These measures matter because the two groups occupy an enormous position in the Russian petroleum industry. American sanctions can create consequences far beyond America’s borders because banks, commodity traders, shipowners and insurers around the world have compelling reasons to retain access to US dollars and the American financial system.

This is the distinctive quality of American sanctions. An EU prohibition primarily tells Europeans what Europeans may not do. An American secondary-sanctions threat can in practice ask an Indian refinery, Chinese bank or Emirati trader a rather more intimidating question: how much is your Russian business worth compared with your access to the United States?

The extraordinary American pressure upon India illustrates the point.

In August 2025, President Donald Trump imposed an additional 25 per cent tariff on Indian goods because India was directly or indirectly purchasing Russian oil. By February 2026, Washington removed that additional tariff after India committed to stop purchasing Russian oil and to buy more American energy. Whatever one thinks of tariffs as economic policy, this episode demonstrated something important about sanctions enforcement: the United States can attack Russian oil revenues not merely by sanctioning Russians but by imposing substantial economic costs upon Russia’s customers.

That is potentially a far more powerful instrument than blacklisting another tanker.

Yet Europe has become more aggressive

There is nevertheless an important paradox in the sanctions regime as it stands in August 2026. Europe has in some respects overtaken America.

The original G7 oil price cap was US$60 per barrel. The EU and United Kingdom subsequently lowered their cap to US$44.10 per barrel, effective from February 2026, while the United States continued to apply the original US$60 threshold. The divergence is substantial. Recent analysis describes the European and British cap as almost 27 per cent lower than the American one.

The EU’s twenty-first sanctions package, adopted on 23 July 2026, maintained the US$44.10 cap despite the exceptional increase in global oil prices associated with the disruption surrounding the Strait of Hormuz. The package suspended the automatic adjustment mechanism until July 2027 rather than permitting the cap automatically to rise with world prices.

This matters because Russian oil has recently been selling considerably above the European ceiling. In July 2026, Urals crude averaged approximately US$60.22 per barrel — roughly US$16 above the EU-UK cap. In principle that creates an opportunity. If Europe could enforce its cap rigorously, Russia would confront a stark choice between selling considerably more cheaply or attempting to move still more oil outside the Western maritime system.

The difficulty lies in those words: if Europe could enforce it rigorously.

The shadow fleet

Russia’s principal answer to maritime sanctions has been the creation of what is commonly called the shadow fleet — a sprawling collection of tankers frequently characterised by obscure ownership, ageing vessels, unusual insurance arrangements, flags of convenience and ship-to-ship transfers.

This has arguably been the greatest Russian success in sanctions circumvention.

By June 2026, according to the Centre for Research on Energy and Clean Air, 66 per cent of Russian seaborne crude was being transported by sanctioned shadow tankers. Another 31 per cent was still carried aboard G7+ vessels, while only a small residue travelled aboard non-sanctioned shadow ships.

Those figures reveal both the weakness and the continuing opportunity inherent in Western sanctions.

The weakness is obvious. Sanctioning a tanker does not physically sink it. A vessel placed upon a sanctions list may continue sailing between Russian and Asian ports if it can obtain a flag, crew, buyer, payment mechanism and some form of insurance.

Yet Russia has not escaped Western maritime infrastructure altogether. For petroleum products in particular, CREA calculated that G7+ tankers still transported 73 per cent of Russian exports in June.

The sanctions battle has therefore become increasingly maritime. Europe has responded by progressively blacklisting ships and the networks supporting them. Its July 2026 package added another 41 vessels, taking the number then covered by EU restrictions to more than 670, and extended targeting to companies and service providers supporting the shadow fleet.

This is no longer merely financial sanctions policy. It is becoming a struggle over the practical infrastructure of maritime commerce.

The limits of European power

Nevertheless Europe suffers from a weakness America does not possess to anything like the same degree: twenty-seven governments must agree.

Sanctions packages are consequently political bargains.

The twenty-first package demonstrated the problem. Greece obtained protection permitting the shipping company Dynagas to continue carrying Russian LNG to third countries under qualifying arrangements, with volumes capped by reference to 2025 levels. The concession helped secure Greek agreement to maintaining the lower oil price cap.

Nor has Europe eliminated its own consumption of Russian hydrocarbons.

In June 2026, the five largest EU importers of Russian fossil fuels still purchased approximately €1.7 billion of them. France imported €349 million of Russian LNG that month and Spain €258 million. Hungary remained the EU’s largest Russian fossil-fuel customer, purchasing approximately €591 million of pipeline gas and crude oil.

This is the uncomfortable contradiction at the heart of European sanctions policy. Europe sanctions Russian hydrocarbons while parts of Europe continue buying Russian hydrocarbons.

The situation is improving structurally — particularly with further restrictions on Russian gas due to bite — but the transition is incomplete.

LNG: the next battlefield

Liquefied natural gas is becoming increasingly important precisely because pipeline gas has declined.

Russia is already attempting to reproduce with LNG the sanctions-evasion architecture it developed for oil. During the first half of 2026 it accumulated additional second-hand LNG carriers, creating what increasingly resembles an LNG shadow fleet. By early August, reporting based upon maritime intelligence indicated a fleet of about 25 vessels associated with this emerging system.

Yet LNG is considerably harder to conceal than crude oil.

Oil tankers are plentiful. LNG carriers are sophisticated cryogenic vessels requiring specialised technology, maintenance, terminals and logistics. Russia’s ability to create a genuinely independent LNG shipping ecosystem is consequently much more constrained.

This may eventually prove one of Europe’s most effective sanctions pressure points.

What do the numbers tell us?

They tell a complicated story.

CREA estimates that during the fourth year of the full-scale invasion Russia earned approximately €193 billion from fossil-fuel exports — 19 per cent less than in the preceding year and 27 per cent below pre-invasion levels. Oil-product revenues fell particularly sharply.

That is hardly evidence of sanctions having no effect.

Yet neither does it represent strangulation of the Russian energy economy. In April 2026, Russian fossil-fuel export revenues actually reached their highest level since September 2023, at roughly €733–734 million per day.

By June they remained around €734 million per day. Intriguingly, export volumes rose by 7 per cent that month while revenues declined by 1 per cent. Crude volumes rose 14 per cent while crude revenues fell 8 per cent.

This is perhaps the single most revealing feature of the sanctions regime.

Russia can still sell the oil. The struggle is increasingly over how much money Russia receives for selling it.

That was always the intellectual logic behind the price cap.

The price cap’s unrealised potential

CREA estimates that complete enforcement of the US$44.10 cap in June 2026 could have reduced Russian revenues by approximately €5 billion — some 36 per cent. It argues that a US$30 cap, if fully enforced, could have reduced June revenues by roughly €6.1 billion, or 44 per cent.

These are modelling estimates rather than observed outcomes, but they illustrate the extraordinary difference between sanctions on paper and sanctions in practice.

The problem is therefore no longer primarily inventing sanctions.

It is enforcement.

Every additional shadow tanker Russia must acquire costs money. Every opaque intermediary takes a margin. Every longer voyage consumes fuel and vessel time. Every dubious insurer adds risk. Every transaction routed through a succession of shell companies makes financing harder. Sanctions can therefore succeed even when Russian exports continue.

But allowing sanctioned vessels simply to continue operating indefinitely converts sanctions into little more than administrative decoration.

So which is more effective — America or Europe?

The answer depends upon what is being measured.

If the criterion is eliminating the West as a market for Russian hydrocarbons, Europe has done vastly more. It was the important market in the first place.

If the criterion is physical interference with Russian maritime exports, Europe — increasingly together with Britain — now appears the more activist sanctions power. Its lower price cap and increasingly extensive shadow-fleet designations are important.

If the criterion is coercing third countries, America remains potentially supreme. The Indian episode demonstrates that Washington can connect Russian oil purchases with access to the vastly more valuable American market. Europe cannot easily reproduce that threat.

If the criterion is financial intimidation, the United States likewise retains the advantage. OFAC sanctions and exclusion from dollar finance can frighten banks and commodity companies thousands of miles from America.

Yet there is an important qualification. Potential power is not the same as exercised power. In August 2026 two senior US senators publicly challenged the Trump administration over what they described as a failure to impose fresh counter-evasion sanctions following the October 2025 Rosneft and Lukoil measures.

Hence the curious contemporary position: the United States possesses the stronger sanctions weapon, while Europe is currently using its weaker weapon more intensively against the Russian hydrocarbons trade.

The sanctions Russia should fear most

The most dangerous future sanctions regime for Moscow would combine the distinctive strengths of both systems.

Europe and Britain would continue reducing the price cap and aggressively identifying shadow vessels. European coastal states would intensify lawful inspection and enforcement against vessels lacking adequate insurance, seaworthiness or documentation. LNG technology, vessels and terminal services would become progressively harder for Russian operators to obtain.

America, meanwhile, would use its financial power against the other end of the transaction — banks, refiners and commodity intermediaries in third countries.

A Chinese or Indian company contemplating Russian crude would then face two separate calculations. Can the oil physically be transported without European maritime services? And is the discount on Russian crude sufficiently attractive to justify jeopardising access to American finance or markets?

That combination would be considerably more formidable than either regime acting independently.

There is also an important lesson from India’s experience. Secondary pressure need not necessarily remain in place permanently. The United States imposed an additional 25 per cent tariff because of Indian purchases of Russian oil and subsequently removed it after India committed to cease those purchases. That is coercive economic diplomacy in its purest form — punishment tied to a defined behavioural change.

Sanctions are a tax upon Russian power

It is therefore misleading to ask whether hydrocarbons sanctions have “worked” by observing that Russian tankers still sail.

Of course they sail.

Russia possesses enormous reserves of oil and gas, borders China, has access to several seas and confronts a world economy that consumes roughly 100 million barrels of oil every day. No realistic sanctions regime was ever going to make Russian petroleum disappear.

The more intelligent question is how much economic rent Russia can extract from those resources.

On this measure the Western sanctions experiment has achieved meaningful results. Russia has lost much of its most valuable neighbouring market. It must transport crude vastly greater distances. It has spent enormous sums constructing alternative shipping arrangements. Its traders accept discounts and additional transaction costs. Its energy companies face restrictions upon Western finance and technology. Its future LNG ambitions confront technological bottlenecks. Its fossil-fuel export revenues during the fourth year of the invasion stood substantially below their pre-war level.

Yet the system remains dramatically porous.

The shadow fleet moves enormous quantities of oil. Russian LNG continues entering European ports. Pipeline exemptions remain. Enforcement differs between countries. The United States and Europe now operate different oil-price caps. Geopolitical crises elsewhere periodically make Western governments nervous about restricting Russian supply because they fear driving global energy prices higher.

This last point explains much of the apparent inconsistency.

The West wants Russia to receive less money for oil without the world receiving substantially less oil from Russia.

Those objectives are compatible — but only if sanctions can force a wedge between the world price and the price Russia actually receives.

That is why the price cap, shadow-fleet campaign and secondary sanctions matter more than increasingly elaborate lists of prohibited transactions.

Europe has the momentum; America has the bigger gun

As matters stand on 19 August 2026, the balance has therefore shifted since the first years of the war.

The European Union has become the more important actor in the direct restriction of Russian hydrocarbons exports. It has abandoned most Russian energy imports, imposed a substantially lower oil-price ceiling than Washington and constructed an increasingly aggressive system directed against Russia’s shadow fleet. Its principal weaknesses are political compromise, residual imports, uneven enforcement and the inherent difficulty of controlling ships and companies outside European jurisdiction.

The United States possesses greater latent coercive power. The dollar, OFAC and access to America’s economy give Washington a capacity to influence third-country purchasers that Brussels cannot readily duplicate. The pressure placed upon India demonstrated just how consequential that power can be.

But Washington has not consistently employed it.

The most effective sanctions policy would therefore not require choosing between the American and European models. It would marry them.

Europe controls important elements of the geography and maritime infrastructure of Russian energy exports. America controls much of the financial architecture through which global commerce ultimately passes. Europe can make Russian oil difficult to transport; America can make it dangerous to buy.

Russia has demonstrated remarkable ingenuity in circumventing sanctions. Yet every circumvention has a price.

The ultimate purpose of hydrocarbons sanctions should be to make that price progressively higher — until the strange achievement of being one of the world’s greatest energy exporters generates steadily less money with which the Kremlin can wage war.

That is the contest that matters. And in August 2026, contrary to the assumptions of the early years of the war, Europe may currently be doing more of the day-to-day fighting — while the most powerful economic weapon remains in Washington’s armoury.