The global oil market is once again bracing for a seismic shift as the Group of Seven (G7) nations and the European Union (EU) weigh a bold new move to further choke off Russia’s oil revenues, a key source of funding for its ongoing war in Ukraine. According to Reuters, both blocs are in advanced discussions to scrap the existing price cap on Russian oil exports and replace it with a sweeping maritime services ban—a measure that could take effect as soon as early 2026 and would mark the closest the West has come to a near-total embargo on Russian crude, not just at the point of import but across the entire transportation and insurance chain.
Russia, a powerhouse in the global oil industry, produced around 9.3 million barrels per day in October 2025, accounting for roughly 9% of worldwide supply, as reported by the International Energy Agency. More than half of this output is exported, with over 90% of seaborne crude shipments going to just three countries: China, India, and Turkey. Yet, despite the G7 and EU almost fully halting direct imports of Russian oil since 2022, a significant portion of Russian crude—over a third, by some estimates—still leaves port aboard Western tankers, many flagged in EU maritime hubs such as Greece, Cyprus, and Malta, and insured or serviced by Western companies.
The current system, introduced in late 2022, hinges on a price cap that allows third countries to use Western shipping and insurance only if they buy Russian oil below a set threshold. The goal, as Reuters explains, was to limit the Kremlin’s income while keeping global oil supplies flowing. But Russia quickly adapted. To sidestep the cap, it rerouted much of its oil to Asia using its own “shadow fleet” of tankers—older vessels with murky ownership structures and no Western insurance. By October 2025, 44% of Russian oil was exported via sanctioned shadow-fleet tankers, 18% via non-sanctioned shadow fleet tankers, and just 38% aboard ships linked to G7 countries, the EU, or Australia, according to the Finland-based Centre for Research on Energy and Clean Air (CREA).
The proposed maritime services ban would aim to cut off this last Western lifeline, ending the use of EU-based shipping for Russian crude and forcing Moscow to rely even more heavily on its shadow fleet. The EU’s next package of sanctions, expected in early 2026, could include this measure if there is consensus with the G7, Reuters notes. British and American officials have reportedly been pushing the plan forward in technical meetings, though any final U.S. decision will depend on the approach taken by President Donald Trump’s administration, which is currently brokering peace talks between Ukraine and Russia.
Enforcement, however, looms as the critical challenge. As Ron Bousso, Reuters’ energy columnist, points out, the effectiveness of the new G7 proposal hinges on Western governments’ willingness to go beyond paper restrictions and actively inspect and detain non-compliant vessels. Isaac Levi, energy analysis team lead at CREA, told Reuters, “We’re not seeing enough deterrence and vessel detention. Until non-compliant vessels get detained, the trade will continue.” In other words, unless coastal states—especially those in the Baltic and Nordic regions, through which much Russian oil passes—step up their game, Moscow may continue to find ways around the restrictions.
There’s also the thorny issue of market dynamics. Russian sellers have already been forced to offer hefty discounts to global oil prices, compensating buyers for the higher risks and logistical headaches of using shadow fleet tankers and complex ship-to-ship transfers. But paradoxically, some analysts warn that scrapping the price cap altogether could actually make life easier for Russian crude buyers, reducing the discounts Moscow must offer if oil prices rise and the calculus for risk becomes more straightforward.
Meanwhile, the West’s economic pressure campaign has been intensifying. In September 2025, several G7 members lowered the price cap on Russian crude to $47.60 per barrel from $60. Then, in October, President Trump imposed sweeping sanctions on Russia’s two largest oil companies, Rosneft and Lukoil, and slapped a 25% tariff on India over its purchases of Russian crude—a move that complicated already fraught trade talks between Washington and New Delhi. Yet, despite these efforts, Russian oil exports have remained surprisingly resilient. Indian imports of Russian crude are set to drop to 1.38 million barrels per day in November and December 2025, down from an average of 1.75 million barrels per day earlier in the year, according to Kpler shipping analytics. China has experienced a similar, albeit less dramatic, decline. Still, as Reuters notes, actual sales may be higher, as Russian crude is often blended at sea, rebranded, and gradually imported under different guises.
Against this backdrop, Russian President Vladimir Putin has been working overtime to shore up alliances and diversify Moscow’s economic ties. On December 5, 2025, Putin and Indian Prime Minister Narendra Modi agreed to expand and diversify trade well beyond oil and defense, despite mounting Western pressure on India to scale back its relationship with Moscow. This diplomatic maneuvering underscores the limits of Western leverage and the growing complexity of the global oil market, where sanctions are only as effective as the willingness of all parties to enforce and comply with them.
The numbers behind the shadow fleet are staggering. The overall fleet working with sanctioned oil from Russia, Iran, and Venezuela now encompasses 1,423 tankers, of which 921 are subject to U.S., UK, or EU sanctions, according to Lloyd’s List Intelligence. Yet, there’s no shortage of old vessels for Russia and its partners to snap up, including from Western shipping companies eager to offload aging ships. Expanding the shadow fleet to replace lost Western capacity appears feasible, at least in the short term.
For the G7 and EU, the stakes are high. The proposed maritime services ban would represent a dramatic escalation in the West’s efforts to squeeze Russia’s war chest, but it also carries risks for global energy markets. Will China, India, and Turkey continue buying Russian oil if Western services are cut off? Most likely, yes—at the right price. But the logistical and financial hurdles will rise, and the ultimate impact will depend on whether Western governments are prepared to tolerate higher oil prices or risk retaliation from major buyers.
As the world watches, one thing is clear: the battle over Russian oil exports is far from over. The next moves by the G7, the EU, and their allies could reshape not only the balance of power in the Ukraine conflict but the very structure of the global energy market for years to come.
