America's 'Oil Weapon' Hits Russia Hard | Opinion

"The oil weapon alone will not win the war in Ukraine, but it might just have brought Vladimir Putin to the bargaining table," Rebecca Grant of the Arlington, Va.-based Lexington Institute told Newsweek last week, referring to sanctions announced by the Treasury Department on Jan. 10.

The oil weapon seems, at least for the moment, to be working. Putin, who had been resistant to negotiations to end the war, agreed to begin discussions, as President Donald Trump announced last Wednesday in a Truth Social posting.

On Jan. 10, Treasury imposed a broad range of measures targeting Russia's oil sales, especially the vessels of its "shadow" or "dark" fleet, the ships that lift sanctioned oil from Russia.

Treasury hit 183 vessels, 143 of them tankers. The measures cover ships carrying an estimated 42 percent of Russia's seaborne oil exports, according to data and analytics platform Kpler. Lloyd's List reports the number could be as high as 50 percent. The U.S. sanctions come after the United Kingdom and the European Union in December listed 90 ships.

The Treasury also named oil traders, charterers, and insurers.

The measures quickly disrupted the flow of sanctioned Russian oil to China and India, with millions of barrels now left floating on tankers as few want to risk American enforcement actions. Purchasers are now chasing oil from sources other than Russia. Middle East crude, therefore, is now in high demand as is oil from Angola and Brazil. Kazakhstan is benefiting too.

"Good going, Treasury," Grant said.

In December 2022, the G7 imposed sanctions on Russian crude sold at a price above a $60-per-barrel cap. There is also a $100-per-barrel cap for refined oil.

In the past two years, Russian crude loaded at Arctic and eastern ports has been sold above the cap, and most of this sanctioned oil ended up in India and China.

Oil is Russia's most important export product, and it is, according to former senior British military intelligence officer Philip Ingram, the "one thing" that permits Putin to continue the war.

As Ingram, speaking to London's Express news site, noted, Western sanctions will eventually affect Russian agriculture and the broader society. "We could see the collapse of the Russian economy completely," he said. Ingram thinks that could happen as early as this year.

Not everyone agrees. "Biden's January 10th sanctions on Russia's shadow fleet of oil tankers may be effective at driving down Putin's oil revenues temporarily," Rebekah Koffler, former Defense Intelligence Agency analyst and author of Putin's Playbook: Russia's Secret Plan to Defeat America, told Newsweek. "In the long-term, however, these revenues will likely recover. This is what had happened in the past, when we introduced oil price caps."

In the past, neither America nor its partners were that serious in either imposing or enforcing sanctions. This time could be different.

"NATO's Baltic Sea navies will enjoy chasing down the grey and black fleet tankers that are pirating oil to China and others from ports like Primorsk," said the Lexington Institute's Grant. "Every year the U.S. and NATO run a maritime exercise called BALTOPS with 50 or more ships, so maybe now they can hunt for the 183 sanctioned vessels."

Taking these vessels offline would be great, but it would be better hitting the purchasers of illicit oil.

"The success of this sweeping action will in part be determined by Chinese authorities, and whether they will continue to allow sanctioned tankers to enter their ports," Lloyd's writes of Treasury's sanctions.

No. Who gave Beijing a veto over Treasury sanctions? The success of the sanctions should be determined by Treasury itself.

In general, the Biden administration, from the first days of the war, was afraid of calling out China or imposing costs on Beijing for across-the-board support of Putin's war effort. China, which greenlighted the invasion with its February 2022 "no-limits" partnership declaration with Russia, provided economic, banking, diplomatic, propaganda, and intelligence assistance to Putin. In addition, Chinese parties sold Russia weapons and other items needed for the war effort and Beijing might even have arranged for North Korea to supply troops, artillery shells, and short-range missiles to the Russian military.

In addition, throughout 2024 dark fleet tankers unloaded oil in China.

In January, China's Shandong province announced it was closing ports to vessels sanctioned by the U.S. In that province, privately owned refineries, the so-called teapots, bought sanctioned crude from Russia as well as from Iran and Venezuela.

Shandong, despite the announcement, is still a sanctions-buster. TradeWinds reported that the Panamanian-flagged Mermar, an Aframax tanker, had waited off Shandong laden with Russian oil. It became the first vessel sanctioned on Jan. 10 to discharge cargo. The vessel docked on Jan. 15 at the Longkou port.

So what's the big deal about a vessel unloading sanctioned oil at a Chinese port?

"When energy carried by dark ships is purchased by state actors, smuggling is legitimized and effectively becomes legal," Jonathan Bass of American energy company Argent LNG told Newsweek on Friday. "Trump's Treasury needs to come down hard on governments flouting the Jan. 10 measures."

Gordon G. Chang is the author of Plan Red: China's Project to Destroy America and The Coming Collapse of China. Follow him on X @GordonGChang.

The views expressed in this article are the writer's own.