Institute for the Study of War: US lifts sanctions on Russian oil for tankers at sea

The United States lifted sanctions on Russian oil that is already on tankers at sea until April 11, 2026, a decision that will buttress the Russian war economy. The US Office of Foreign Asset Control (OFAC) reported on March 12 that it is temporarily authorizing the delivery and sale of crude oil and other petroleum products that Russian-origin vessels are carrying in violation of sanctions from March 12 through April 11.[1] US Treasury Secretary Scott Bessent stated that the US is temporarily authorizing a “narrowly tailored, short-term measure” that will allow countries to purchase Russian oil “currently stranded at sea” in order to promote stability in global energy markets.[2] The US decision to lift sanctions, even temporarily, will allow Russia to receive much-needed income that will strengthen the vulnerable Russian war economy.

The elevated price of oil and the US decision to ease sanctions on Russia will provide Russia with greater flexibility and support the Russian domestic economy, Russian force generation, and the Russian defense industrial base (DIB). The Financial Times (FT) reported on March 12 that Russia is earning as much as $150 million dollars a day in extra budget revenues from oil sales.[3] The FT reported that Russia has already earned an estimated $1.3 to $1.9 billion dollars from taxes on oil exports after the effective closure of the Strait of Hormuz. The FT calculated that Russia could earn as much as $3.3 to $4.9 billion in overall additional revenues by the end of March 2026, assuming that Russia’s Urals crude prices average around $70 to $80 a barrel instead of remaining at the previous two months’ average of roughly $52 a barrel. The International Energy Agency (IEA) reported that Russian crude and oil exports plunged to their lowest level since the 2022 invasion of Ukraine in February 2026 — just before the Iran conflict began.[4] Reuters reported on March 12 that it calculated that Russia’s mineral extraction tax on crude oil production alone could generate around 590 billion rubles ($7.43 billion dollars) if prices remain near current levels, up from 314 billion rubles ($3.9 billion dollars) in January 2026 and an expected 300 billion rubles ($3.7 billion dollars) in February 2026.[5] Ukrainian President Volodymyr Zelensky reported on March 13 that the US decision to partially ease sanctions against Russian oil could allow Russia to earn about $10 billion dollars in an unspecified period of time.[6]

ISW’s previous forecasts that compounding economic costs would force the Kremlin to make difficult decisions in 2026 and 2027 assumed that the trend of Russian economic downturn would remain true. The global oil price shock from the war in Iran has likely invalidated elements of those assumptions. The US decision to provide Russia with sanctions relief on oil may financially benefit Russia by reversing months of declining Russian oil revenue and allow Russia to continue to finance its war against Ukraine in the medium term. ISW has previously assessed that worsening economic conditions led the Russian government to enact politically unpopular and economically sub-optimal policies, such as increasing the value-added tax (VAT) and lowering the key interest rate despite high Russian inflation.[7] ISW previously assessed that Russia is facing force generation issues largely due to budget constraints, including Russia’s inability to pay costly one-time enlistment bonuses indefinitely.[8] These previous ISW assessments included the assumption that Russian oil would remain sanctioned and that the price of oil would remain stable. The US decision to temporarily ease sanctions and the global oil price shock partially invalidates these assumptions in the short and possibly medium term. Russia has been struggling to amass the forces, equipment, and domestic support needed to continue the war, but an increased cash flow may allow Russia to strengthen its capabilities.[9] ISW’s previous forecasts may also hold true, but on a delayed timeline, should oil prices normalize and Russian oil revenue degrade back to its February 2026 status in the mid-term.

Ukrainian Commander-in-Chief Colonel General Oleksandr Syrskyi provided details on the end strength goals of the Russian Unmanned Systems Forces (USF) and Russian first-person view (FPV) drone production. Syrskyi reported on March 12 that the Russian military command plans to expand the Russian USF to an end strength of 101,000 by April 1 and that Russia is now capable of producing over 19,000 FPV drones daily.[13] Syrskyi noted that the Russian military command is therefore accelerating the formation of drone units, especially in southern Ukraine, where Ukrainian forces are making significant gains in counterattacks that are causing operational and strategic effects across the theater.[14]Russian President Vladimir Putin’s replacement of the Russian Ministry of Internal Affairs’ (MVD) first deputy minister likely signals a reshuffling of the MVD. Putin signed a decree on March 12 replacing MVD First Deputy Minister Colonel General Alexander Gorovoy with Main Directorate for Economic Security and Anti-Corruption Head Lieutenant General Andrei Kurnosenko.[15] Russian opposition outlet Verstka noted that the formal reason for Gorovoy’s unexpected replacement is his reaching age 65, although there are other older MVD deputy ministers at the moment, and Putin has made exceptions to retain senior officials who reached the mandatory retirement age, such as Russian Chief of the General Staff Army General Valery Gerasimov.[16] A Russian insider source noted on March 12 that Gorovoy had served as first deputy minister for nearly 15 years and that his replacement signals a reshuffling of the MVD.[17] A Russian Telegram channel commenting on political issues claimed that Kurnosenko has strong ties to Secretary of Russia’s State Council Alexei Dyumin — who became the youngest-ever member of the Russian Security Council in September 2024.[18]

Key Takeaways

1. The United States lifted sanctions on Russian oil that is already on tankers at sea until April 11, 2026, a decision that will buttress the Russian war economy.
2. The elevated price of oil and the US decision to ease sanctions on Russia will provide Russia with greater flexibility and support the Russian domestic economy, Russian force generation, and the Russian defense industrial base (DIB).
3. ISW’s previous forecasts that compounding economic costs would force the Kremlin to make difficult decisions in 2026 and 2027 assumed that the trend of Russian economic downturn would remain true. The global oil price shock from the war in Iran has likely invalidated elements of those assumptions.
4. Swedish authorities boarded on March 12 a tanker that may be part of the Russian shadow fleet and has previously shipped petroleum from Russia.
5. Ukrainian Commander-in-Chief Colonel General Oleksandr Syrskyi provided details on the end strength goals of the Russian Unmanned Systems Forces (USF) and Russian first-person view (FPV) drone production.
6. Russian President Vladimir Putin’s replacement of the Russian Ministry of Internal Affairs’ (MVD) first deputy minister likely signals a reshuffling of the MVD.
7. Ukrainian forces recently advanced in the Kostyantynivka-Druzhkivka tactical area.
8. Ukrainian forces struck Russian chemical and oil infrastructure. Russian forces launched one Iskander-M missile and 126 drones against Ukraine, including Kharkiv, Mykolaiv, and Odesa oblasts.