Ukraine Faces Sanctions Dilemma as Russian Oil Revenues Surge Past $10 Billion
Expired Trump administration waivers leave Kyiv uncertain whether constraints on Moscow's energy income will hold with Brent above $109.
Ukraine expressed deep uncertainty over the Trump administration’s approach to Russian oil sanctions after temporary relief measures expired on 16 May, with Kyiv warning that any renewed waivers could funnel billions more into Moscow’s war effort even as crude markets price in ongoing policy volatility.
The administration allowed its final Sanctions waiver to lapse after extending relief three times since March, when the Strait of Hormuz closure sent Brent crude surging. Yet the expiration offers little reassurance to Ukrainian officials who watched Russia earn an estimated $150 million per day in budget revenues during the waiver window, according to Atlantic Council—money President Volodymyr Zelensky says funds “devastating strikes on Ukraine.”
The Waiver Window
Between 12 March and 16 May, Treasury Department waivers allowed purchasers of Russian crude already loaded on tankers to complete transactions without legal consequences. Over 110 vessels in Russia’s shadow fleet—the maritime workaround Moscow built to evade Western restrictions—carried $10 billion in oil under this protection, according to Kyiv Post. Volumes jumped 16% while seaborne crude revenues more than doubled in March alone.
The policy originated as crisis management. When the U.S.-Iran conflict shuttered the Strait of Hormuz in March, removing roughly 20% of global oil supply, the administration sought to prevent price spikes by keeping Russian barrels flowing. Treasury argued that “as negotiations accelerate” with Iran, ensuring “all oil is available to those who need it” justified the temporary relief, per statements to The Hill.
But Brent crude climbed past $109 per barrel by 15 May—an 8.1% weekly gain, according to Trading Economics—while WTI rose above $106 with an 11% weekly advance. The International Energy Agency warned markets could remain severely undersupplied through October even if the Iran conflict ends next month. Russian energy stocks rallied throughout the period, with the S&P 500 energy sector now leading the index after starting 2026 up just 7.9%, per 24/7 Wall St.
“Every dollar paid for Russian oil is money for the war and is used for devastating strikes on Ukraine.”
— Volodymyr Zelensky, President of Ukraine
Kyiv’s Calculation
Ukrainian officials view the waivers as a strategic error that undermines Western leverage. Zelensky stated to The Moscow Times in April that lifting sanctions “will, in any case, lead to a strengthening of Russia’s position” because Moscow “spends the money from energy sales on weapons.” The concern extends beyond immediate battlefield funding—Kyiv fears sanctions relief signals wavering Western commitment, potentially encouraging Moscow to prolong the conflict in expectation of further concessions.
Senate Democrats echoed this critique when Treasury extended the waiver in April. Senators Shaheen, Schumer, and Warren called the decision “shameful” and accused Treasury Secretary Bessent of reversing his pledge not to extend relief, noting that “Putin has been one of the biggest beneficiaries of President Trump’s war against Iran.”
The Price Paradox
The waivers failed to deliver their stated objective. Despite Treasury’s claim that ensuring Russian supply would stabilise prices, crude markets rallied throughout the relief period. Isaac Levi, head of Russia research at the Centre for Research on Energy and Clean Air, told Foreign Policy that “Russia is making a huge amount of money off the Iran war. Everything is looking great for the Russians right now, though it all depends on Trump’s mood.”
That uncertainty creates a political trap. Markets have already priced in the possibility of renewed relief—traders assume the administration will prioritise price stability over sanctions enforcement if Brent approaches $120. Yet reimposing waivers would trigger immediate backlash from Ukraine and Congressional critics, while declining to act risks oil price spikes ahead of November midterm elections.
The Council on Foreign Relations analysis highlights the structural problem: the waivers undermined existing price cap mechanisms without creating alternative constraints on Russian revenues. Moscow effectively captured the upside of both higher prices and weakened enforcement, banking billions while Western policymakers debated next steps.
The G7 price cap on Russian oil—set at $60 per barrel in December 2022—aimed to limit Moscow’s revenues while keeping crude flowing to global markets. The mechanism banned Western shipping, insurance, and financial services for Russian oil sold above the cap. Trump’s waivers allowed transactions outside this framework, effectively suspending enforcement for tankers already loaded with crude regardless of price.
What to Watch
The next inflection point arrives when crude inventories tighten further or Iran negotiations collapse. If Brent approaches $120, the administration faces a choice between triggering voter anger over gasoline prices or extending relief that funds Russian military operations. Ukraine will press European allies to maintain enforcement regardless of U.S. policy shifts, but European refiners dependent on stable crude supply may resist if alternatives remain scarce. Watch for Treasury guidance on enforcement priorities in the post-waiver period—silence suggests the door remains open for renewed relief. Congressional appropriations fights over Ukraine aid may incorporate sanctions enforcement language as leverage. And monitor Russian export volumes through June—if Moscow maintains March output levels without active waivers, it signals the shadow fleet has adapted sufficiently to operate outside formal Western permissions.