The Trump administration landed a quiet but forceful blow against Russian energy exports last week. On March 12, the U.S. Treasury Department let a Biden-era sanctions waiver lapse, effectively prohibiting any further energy-related payments to sanctioned Russian banks. The waiver, referred to as General License No. 8L (GL 8L), was the last in a series of 13 such waivers and was intended to give companies time to wind down their business with those banks. The Trump administration then took the essential next step, letting the final waiver expire.
While the Biden administration was right to issue GL 8L, albeit just days before Biden left office, the Trump administration was right to let this “get-out-of-jail-free” card for Russian energy importers die.
Winding Down Energy-Related Transactions: Too Little, Too Late
When Vladimir Putin launched his full-scale invasion of Ukraine in February 2022, President Biden promised to “limit Russia’s ability to do business in dollars and to be part of the global economy.” What followed was an onslaught of sanctions that, according to Biden, were designed to “stunt the ability to finance and grow the Russian military.” However, as Biden himself remarked, U.S. sanctions on Russia were also “specifically designed to allow energy payments to continue.” Without a waiver authorizing energy payments, he feared, global oil prices would spike and negatively impact American consumers.
Despite warnings that exempting Russia’s energy sector from sanctions could backfire by allowing significant energy revenues to flow to Russia’s military, Biden’s Treasury Department authorized energy-related payments involving certain sanctioned Russian banks. This carve-out effectively allowed Moscow’s war economy to retain access to its biggest revenue source. While Russian oil shipments declined by 15 percent shortly after February 2022, they quickly rebounded to pre-invasion levels and maintained volume throughout the lifespan of the waiver.
If Biden’s sanctions waiver were still in place, firms across the world would continue to send hard currency directly to the banks responsible for funding Putin’s war machine. Gazprombank, for instance, processes all salary payments and combat bonuses for active-duty Russian soldiers. VTB manages 100 percent of United Shipbuilding Corporation, the country’s largest shipbuilder.
China, India Subject to Greater Secondary Sanctions Risks
By allowing GL 8L to expire, President Trump is effectively limiting the pool of buyers for Russian oil by increasing the sanctions risk for third-country buyers who continue to deal with sanctioned Russian banks. Buyers are already wary, with Russian seaborne crude export volumes dropping 9 percent since the wind-down waiver took effect in January. The threat of secondary sanctions primarily affects China and India, which have respectively bought 47 percent and 38 percent of all Russian crude exports since December 2022. They have predominantly done so by accepting oil imports transported by Moscow’s so-called “Shadow Fleet,” a fleet of aging Russian ships that operate under dubious flags and without standard-issue Western insurance.
While China and India were typically happy to accept port calls from shadow fleet vessels — India, China, and Turkey collectively accounted for 95 percent of all shadow fleet exports in May 2024 — they have also shown a willingness to comply with U.S. restrictions on Russian energy in the face of potential secondary sanctions. In January 2025, India declared it would deny entry to oil tankers sanctioned for transporting Russian oil. Around the same time, China’s Shandong Port Group banned U.S.-sanctioned tankers from accessing its ports.
U.S. Should Further Squeeze Russia
The Trump administration should build on this momentum by moving to further restrict Russian energy revenues. First, the administration should comprehensively sanction the remaining 400 to 600 ships that comprise Moscow’s shadow fleet. Second, it should more aggressively wield secondary sanctions against violators of the G7 price cap and firms dealing with sanctioned Russian financial institutions, including Chinese and Indian refineries and the port authorities that service them.
Alexander St. Leger is a research analyst for the Center on Economic and Financial Power (CEFP) at the Foundation for Defense of Democracies (FDD). For more analysis from Alexander and CEFP, please subscribeHERE. Follow him on X@AlexStLeger. Follow FDD on X@FDD and@FDD_CEFP. FDD is a Washington, DC-based, nonpartisan research institute focusing on national security and foreign policy.