Pressuring Russia to Peace with a Maritime Services Ban

KSE Institute has released a new analytical report, Pressuring Russia to Peace with a Maritime Services Ban, examining how a comprehensive ban on maritime services for Russian oil exports could significantly weaken Russia’s war-financing capacity.

As Russia’s full-scale invasion of Ukraine enters its fifth year, the Kremlin continues to pursue maximalist demands while intensifying attacks on civilians and critical infrastructure. However, Russia’s confidence masks deep and growing vulnerabilities in its economy—particularly due to its dependence on oil and gas exports and revenues, which have come under serious pressure.

For the first time since the start of the full-scale invasion, Russia is facing sustained pressure from both low oil prices and tighter sanctions. This creates a strategic window for the EU and its partners to increase economic pressure and push the Kremlin toward serious negotiations.

Limitations of the Oil Price Cap

The analysis highlights that the oil price cap, introduced to limit Russian revenues while maintaining global supply, has failed to deliver lasting results. Although it temporarily widened discounts in early 2023, weak enforcement allowed widespread circumvention through falsified pricing information. As a result, Russian oil revenues continued to flow and finance the war.

A Stronger Alternative: Maritime Services Ban

In response, KSE Institute supports replacing the price cap with a simpler and more enforceable measure: a ban on maritime services provided by EU companies for transporting Russian oil.

The report endorses the European Commission’s proposal to introduce such a ban as part of the EU’s 20th sanctions package but argues that it should apply to all Russian oil exports—not only crude—and be adopted by all G7+ partners.

The analysis assumes that the MSB should not take effect later than July 1, 2026. In the  baseline scenario, a maritime services ban would:

• Reduce Russian oil export volumes by 1.4 million barrels per day in the second half of 2026 (-18% vs. 2025)  and by 0.8 million barrels per day in 2027 (-11%);
• Deepen discounts on Russian oil and increase shipping costs;
• Cut cumulative export earnings by approximately $46 billion over 18 months;
• Reduce oil and gas budget revenues by around $23 billion over this period.

Given already declining prices and recent US sanctions on major Russian oil companies, these losses would substantially weaken Russia’s fiscal position and economic stability.

Key Implementation Challenges

The report stresses that the effectiveness of a maritime services ban will depend on careful implementation and coordinated enforcement.

Addressing the Shadow Fleet

A service ban will inevitably incentivize Russia to expand its shadow fleet, increasing the number of aging and poorly insured vessels transiting the Baltic, Black, and North Seas. Without decisive action, this would pose growing economic, environmental, and security risks.

KSE Institute therefore recommends:

• Expanding vessel listings across G7+ jurisdictions;
• Targeting networks in non-coalition countries that support sanctioned ships;
• Enforcing international maritime law, including detaining vessels operating without valid flags.

Alignment Within the G7+ Coalition

Close coordination among G7+ partners is essential, given the continued role of UK and US insurers in covering mainstream tankers. Key providers include major British and American protection and indemnity clubs. Recent experience with the oil price cap has shown that regulatory misalignment weakens enforcement. Without common standards, vessels could shift to alternative insurers to evade restrictions. 

Impact on Legitimate Shipping

The transition from the price cap to a services ban would affect some G7+ operators more than others, particularly Greek shipping companies. Maltese-flagged vessels and British, American, and Norwegian insurers also play significant roles. Nevertheless, the report argues that an effectively enforced ban would ultimately benefit legitimate shipping. The rapid growth of the shadow fleet undermines compliant operators and creates serious environmental risks. Moreover, Russian oil is not indispensable for most G7+ companies, which have repeatedly exited the trade when compliance risks increased.