The era when American sanctions could reliably choke off an adversary's oil revenue has ended - and a global "shadow fleet" of more than 1,000 tankers, built largely with Russian money, helps explain why.
Peter E. Harrell, who served as senior director for international economics at the National Security Council from 2021 to 2022, has detailed the decline in a new Foreign Affairs essay, "Hvylya" reports.
The numbers tell the story. The Trump administration issued more than 600 Iran-related sanctions designations in 2025, targeting both tankers and buyers. Yet Tehran's crude exports held steady at roughly 1.5 million barrels per day - matching 2016 levels, when the nuclear deal was still in force. Venezuela's oil sales proved equally resistant, appearing stable or higher than 2024 despite intensified pressure. Russia's export volumes barely moved through 2025, even after Washington sanctioned Rosneft and Lukoil, its two largest oil companies, in October.
The key factor, Harrell argued, is China. In 2025, Beijing purchased roughly 90 percent of Iran's oil exports and was the largest buyer of Russian and Venezuelan crude. Major Chinese banks and state oil firms avoid sanctions violations to protect their dollar access. But a "growing number of companies are taking the other side of that trade," Harrell wrote - willing to risk losing American market access because profits elsewhere are large enough. Kunlun, a Chinese bank sanctioned in 2012 for transacting with Iranian banks, has reportedly thrived. Shandong Shengxing Chemical Company, sanctioned last year for buying Iranian oil, was touting construction of a new facility on its website in January.
After Russia invaded Ukraine in 2022, Moscow spent an estimated $10 billion assembling its own tanker fleet to ship crude without relying on Western vessels, banks, or insurance. The result is a "shadow fleet" of more than 1,000 tankers that operates independently of the U.S.-led financial system, selling oil to buyers in India and China who have "little business in the United States" and thus little to lose from American sanctions.
Washington could theoretically inflict heavy costs by sanctioning large Chinese banks, Harrell noted. But doing so would shatter the fragile economic detente Trump has pursued since signing a one-year trade deal with Beijing last November - a price the administration appears unwilling to pay. "Hvylya" earlier reported on what Beijing's silence about Iran reveals about its reliability as an ally.