As negotiations continue to seek an end to the conflict in Ukraine, the possibility of easing sanctions on Russia—particularly on its energy sector—has become a key discussion point. Given that oil and gas exports are a vital revenue source for Moscow, any relief in restrictions could significantly reshape global energy flows. Sanctions targeting Russia’s energy industry have been in place since 2014, following the annexation of Crimea, but were intensified after the full-scale invasion of Ukraine in 2022. The most stringent measures came in January 2024, when Washington imposed its harshest restrictions yet.

Before the war, Russia was among the largest suppliers of fuel oil to the United States, shipping up to 1 million metric tons (about 240,000 barrels per day) per month. Additionally, the U.S. imported smaller volumes of Russian crude oil, particularly from the Far East. If sanctions are loosened, these energy flows could resume, allowing Russia to regain its position in the American fuel market. However, political opposition in Washington and ongoing tensions between Moscow and Western nations may limit the extent of any trade revival.

Europe, once Russia’s main energy customer, has sharply reduced its reliance on Russian oil and gas due to successive EU sanctions. The latest restrictions, extended until at least September, have slashed Russian petroleum imports to just 10% of their pre-war levels, according to Eurostat. Brussels is unlikely to ease these restrictions in the short term, as the bloc remains committed to phasing out Russian energy imports entirely by 2027. Furthermore, physical infrastructure damage—such as the destruction of three Nord Stream gas pipelines in 2022—adds another layer of complexity to any potential resumption of large-scale Russian energy exports to Europe.

The most immediate impact of sanctions relief could come from changes to U.S. financial restrictions on Russian energy transactions. By cutting off major Russian banks from the SWIFT global payments system and limiting their access to international financial services, Western sanctions have made it significantly more expensive and time-consuming for Russian energy firms to process payments. If these financial barriers were eased, Russian companies could more easily conduct transactions in U.S. dollars, potentially boosting their export revenues.

Despite efforts by Russia and China to develop alternative payment systems, challenges remain. Workarounds have helped reduce transaction times, but Russian oil sellers still face higher costs when dealing in currencies other than the U.S. dollar. Multiple currency conversions add to transaction fees, making Russian exports less competitive. Companies like Gazprom Neft and Surgutneftegaz, Russia’s third and fourth largest oil producers, were hit with new U.S. sanctions in January, further complicating their ability to conduct international business.

Sanctions on Russian financial institutions have also played a significant role in disrupting energy trade. Gazprombank, which had been processing payments from Europe for Russian gas, was sanctioned by the U.S. in November 2023. While Washington later granted temporary waivers for certain countries, including Hungary, Slovakia, and Turkey, to facilitate payments, the long-term future of these arrangements remains uncertain. Any easing of sanctions could restore financial stability for Russian energy exporters, but political and economic tensions between Russia and the West will likely continue to shape the global energy landscape.