Russia Sanctions Relief Offers Moscow a Windfall, Little Relief to Energy Markets

Russia is getting a financial boost from an unexpected source: the U.S. Treasury Department. On March 12, the department’s Office of Foreign Assets Control (OFAC) issued a one-month general license authorizing the sale of sanctioned Russian crude oil and petroleum products. The authorization, referred to as General License (GL) 134, applies only to Russian crude oil or petroleum products loaded onto vessels as of March 12.

GL 134 is one of several measures the Trump administration is taking to potentially mitigate the impact of energy supply shocks resulting from the war in the Persian Gulf. Other efforts to lower energy prices include contributing to a major multinational release of strategic petroleum reserves, attempting to organize a naval escort coalition to reopen the Strait of Hormuz, and potential legislative waivers to ease domestic shipping.

A Shot in the Arm Right When Russia Needed It

While intended to mitigate energy market shocks globally, GL 134 will certainly benefit Russia — a fact the Trump administration recognizes. The administration issued a similar authorization on March 5 limited to sales of already-loaded Russian crude oil and petroleum products to buyers in India. That same day, Treasury Secretary Scott Bessent described the boon to Russia as “an inevitability,” caveating that it is the administration’s “hope that it will be … a micro-period that they will benefit.”

Russia is desperate for additional revenue after falling energy receipts pushed its budget deficit to more than 90 percent of its full-year target just two months into 2026. The Financial Times estimates that the Kremlin could now receive revenue gains of $3.3 billion-$4.9 billion by the end of the month, due to both the issuance of GL 134 and more pressing demand for energy. Moscow’s financial windfall is arriving at just the wrong time. Reuters reported last week that the Kremlin was “preparing a possible 10 percent cut to all ‘non-sensitive’ spending in this year’s budget.”

Energy Prices Show Little Change Despite Sanctions Relief

GL 134 appears to have done little to ease the price shock it was designed to address. Brent crude surged to nearly $120 per barrel earlier this month and was trading just above $100 when GL 134 was issued. Prices dipped briefly the following session before climbing back above $104 by March 17. Meanwhile, the roughly 125 million barrels of Russian crude at sea represent five to six days of global supply and will not meaningfully replace the 15 million barrels per day of Middle Eastern output trapped near the Strait of Hormuz. What’s more, most Russian crude was likely already bound for buyers in India and China, meaning GL 134’s expanded scope beyond the previous license’s limitation to India is unlikely to produce more supply for other markets.

Show Russia the U.S. Is Serious on Sanctions

The administration is unlikely to pursue aggressive enforcement against entities that push the boundaries of GL 134 during a supply crisis. But if it extends the license beyond April 11, it should require that entities relying on the authorization report to OFAC on how they are using it and who is benefiting. Reports should include buy-side and sell-side information on pricing, quantity, counterparties, and the financial institutions involved.

The administration should also resist any pressure to permanently roll back energy-related sanctions on Russia, which would further Moscow’s ability to sustain its war against Ukraine. As a signal of resolve, the administration should consider imposing sanctions on Russian energy infrastructure that has so far been spared because of its importance to Europe’s energy supply. It could, for example, designate Novatek’s “Yamal LNG” — one of Russia’s key liquified natural gas facilities — but delay full implementation until after the European Union’s ban on Russian LNG imports takes effect on January 1, 2027. This would serve as an effective signal that Russia remains a focus of U.S. economic sanctions without placing additional constraints on increasingly energy-constrained partners.

Max Meizlish is a research fellow for the Center on Economic and Financial Power (CEFP) at the Foundation for Defense of Democracies (FDD). For more analysis from Max and CEFP, please subscribe HERE. Follow Max on X @maxmeizlish. Follow FDD on X @FDD and @FDD_CEFP. FDD is a Washington, DC-based, nonpartisan research institute focusing on national security and foreign policy.