U.S. Sanctions on Russia Drive Oil Freight Costs Skyward


Last updated: January 27, 2025

Tighter U.S. sanctions targeting Russia’s energy sector have sent oil-linked shipping costs soaring, intensifying pressure on Moscow’s maritime trade networks.

The latest measures, unveiled by the U.S. Treasury on January 10, aim to sever Russia’s energy revenue lifeline by blacklisting key players such as Gazprom Neft, Surgutneftegas, and 183 oil tankers tied to the “shadow fleet” or Russia-based operators.

This crackdown includes maritime insurance firms Ingosstrakh Insurance Company and AlfaStrakhovanie Group, further tightening the screws on Russian oil exports.

The sanctions strike a nerve for Russia, which has already been rerouting crude and oil products to Asia-Pacific markets since European and G7 bans went into effect in late 2022 and early 2023.

Numbers Tell a Tough Story

Analytics firm Vortexa reported that 890 tankers carried Russian oil over the past six months, with 12% of these vessels already under sanctions before the recent escalation.

The International Energy Agency (IEA) added that the newly blacklisted fleet of 160 tankers transported 1.6 million barrels per day last year, representing nearly a quarter of Russia’s seaborne oil exports.

The impact of the sanctions is rippling through the shipping business, limiting tanker availability and pushing freight rates higher.

The ripple effects of these measures are evident. Shipping costs for tankers on key Middle East-to-Asia routes jumped over 40% within days, according to Argus Media.

Freight derivatives also saw a surge in activity, with traded Forward Freight Agreement contracts hitting 11,412 on January 10, a sharp increase from average volumes in the preceding months.

A Chilling Effect on Russian Oil

The sanctions are poised to destabilize Russian oil supply chains.

The IEA warns of disruptions due to the shrinking shadow fleet, restrictions on insurance, and limits on key oil traders.

Russian crude exports dipped by 250,000 barrels per day in December to 4.6 million barrels daily, signaling early signs of strain.

While the IEA refrains from revising its forecasts yet, industry experts suggest these sanctions could leave a lasting dent in Russia’s oil-driven economy.

The battle for energy dominance is heating up, and the freight rate surge signals rough seas ahead for global markets.

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Venture Smarter | U.S. Sanctions on Russia Drive Oil Freight Costs Skyward
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Jon Morgan, MBA, LLM, has over ten years of experience growing startups and currently serves as CEO and Editor-in-Chief of Venture Smarter. Educated at UC Davis and Harvard, he offers deeply informed guidance. Beyond work, he enjoys spending time with family, his poodle Sophie, and learning Spanish.
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Venture Smarter | U.S. Sanctions on Russia Drive Oil Freight Costs Skyward
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LJ Viveros has 40 years of experience in founding and scaling businesses, including a significant sale to Logitech. He has led Market Solutions LLC since 1999, focusing on strategic transitions for global brands. A graduate of Saint Mary’s College in Communications, LJ is also a distinguished Matsushita Executive alumnus.
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