Stratfor: New U.S. Sanctions bill unlikely to impact Russia's oil exports or war strategy

On July 28, a bipartisan group of U.S. senators voted to advance the Sanctioning Russia and Iran Act of 2026, a comprehensive sanctions bill targeting Russia and its top oil and gas customers, Stratfor writes.

The bill, in its current form, would grant the U.S. president authority for five years, though not require him, to impose tariffs of up to 100% ad valorem on all goods imported from the five largest purchasers of Russian crude oil or natural gas and the five leading jurisdictions that facilitate Russian energy sanctions evasion. This could potentially expose China, India and other major customers to costs far exceeding the value of their Russian energy trade. The bill would also bar new U.S. investment in Russia's energy sector and grant the president a separate authority to levy duties of up to 500% on Russian-origin goods.

If enacted, the bill would require the president to impose sanctions on senior Russian officials, state-controlled companies, major banks, and entities involved in the defense and energy sectors. It would also subject foreign financial institutions that conduct significant transactions with sanctioned Russian banks to secondary sanctions and expand restrictions against vessels, their owners, insurers, ports and other companies involved in Russia's shadow fleet. Additionally, the bill would extend existing U.S. sanctions under the Iran Sanctions Act of 1996 for another five years through 2031.

According to the data from the Finnish Center for Research on Energy and Clean Air, China, India and Turkey would likely qualify as the three largest country-level buyers of Russian oil, followed by Hungary and Slovakia. But since the bill would require a 12-month calculation after its enactment, the final list could differ.

The bill gained further traction amid Trump's softening posture toward Ukraine, driven in part by a campaign of Ukrainian drone strikes draining Russia's oil sector that appears to have drawn Trump's support as a hoped-for means to pressure Russia to return to the negotiating table more seriously. Still, the revised bill would grant the executive branch broad discretion over implementation, particularly its tariff provisions, which allow the president to waive almost any sanction, restriction or tariff after certifying that the waiver serves U.S. national interests, without requiring congressional approval.

The updated bill would also allow the U.S. Trade Representative (USTR) to adjust tariffs on all imports from covered countries that purchase Russian oil or gas or facilitate sanctions evasion to any rate above zero and up to 100% without invoking the national interest waiver, though the USTR would still have to justify the adjustment to congressional committees.

The sanctions bill still faces significant hurdles in Congress. The Senate must first approve numerous amendments, including a new controversial proposal by Trump to extend the Russian oil tariff mechanism to buyers of Iranian crude. Even if the Senate overcomes opposition from Democrats, some Republicans and trade groups to fast-track the pending amendments before its recess starts on Aug. 10, the House of Representatives will not consider the bill until it reconvenes on Aug. 31. And at that stage, House Democrats — wary of expanding the president's tariff authority even further — will likely seek to reduce the legislation's scope.

Even if the bill passes both chambers before the 119th Congress ends in January 2027, the Trump administration will likely hesitate to enforce its most severe provisions. Continued closures or disruptions in the Strait of Hormuz, especially if coupled with ongoing Ukrainian strikes on Russian energy infrastructure, could drive global oil prices higher, raising the political cost of tightening the market. To avoid further restricting Russian oil flows, Trump may thus instead choose to meet the bill's minimum requirements by levying only a nominal duty, or simply use the threat of higher tariffs as diplomatic leverage.

Furthermore, Trump is highly unlikely to impose substantial tariffs on India and China, the two largest buyers of Russian oil, as this would unlikely prompt either country to reduce their purchases, given New Delhi and Beijing's resistance to previous rounds of U.S. pressure.

Moreover, Russia's shadow fleet remains large enough to sustain export flows, while the Trump administration's staffing cuts at the Treasury and State departments could further weaken Washington's ability to track evasive shipping networks and enforce restrictions on individual vessels. These and other constraints indicate that the bill, if enacted, is unlikely to compel Russia to end its war in Ukraine for the foreseeable future.

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