Something that’s getting framed as “technical sanctions policy” but is actually pretty significant geopolitical reconfiguration is the new round of pressure on Russian energy firms like Lukoil and Rosneft.
These sanctions aren’t primarily about punishment or morality: it’s a reshuffling of who mediates it, who insures it, and who gets leverage over price and supply. They’re about forcing a re-routing of oil flows, capital access, insurance, and long-term contracts in ways that weaken Russia’s ability to act as a stable energy anchor for Europe and parts of the Global South.
What’s striking is that Western governments keep presenting this as a narrow response to Russian aggression, when it’s clearly a deliberate attempt to reassert control over energy geopolitics after a decade of relative slippage. And, as usual, the costs are most likely to land on countries downstream of these markets (higher volatility, worse terms, fewer options) rather than on the states designing the sanctions.
We’re left with the pattern we keep seeing: policies sold as targeted and ethical that function, in practice, as structural moves to soak the increasing cost of energy, with their real effects displaced onto people and regions that had no say in them.
One concrete change since the latest sanctions cycle is the consolidation of Russian crude flows through a small number of intermediating states. India’s share of Russian seaborne crude imports has remained elevated not because India “sides with Russia,” but because Indian refiners can arbitrage discounted Urals crude into global diesel and gasoline markets with Western shipping and insurance still partially in play. This effectively launders sanction risk into price spreads.
At the same time, Europe’s substitution away from Russian supply has not been toward “diversification” in any meaningful sense. It has moved toward tighter dependence on US liquefied natural gas, Middle Eastern swing producers, and a handful of commodity trading houses that sit between production and delivery. The system becomes less politically legible and more cartel-like, even as it is described as market-based.
A third shift is temporal rather than geographic: longer shipping routes and ship-to-ship transfers increase transit time and inventory in motion. That makes prices more sensitive to disruption, weather, and conflict, which structurally advantages actors with balance sheets large enough to hold risk and disadvantages states that buy energy hand-to-mouth.
The point isn’t that sanctions “don’t work.” It’s that they work by moving power sideways: from producers and consumers to financial, logistical, and legal choke points. Calling this a narrow response to Russian aggression obscures the fact that it is a deliberate re-engineering of who governs energy markets and who bears volatility when that governance fails.
If you want to see how energy sanctions really work, don’t look at wells or pipelines. Look at insurance pools, price benchmarks, and clearing systems.
Maritime insurance is the first choke point. A small number of Western-based protection and indemnity clubs effectively decide which shipments are “legible” to the formal economy. Oil can move without them, but at higher cost, higher risk, and through narrower channels. That alone concentrates advantage in firms large enough to self-insure or socialize losses.
The second choke point is benchmarking. Crude priced against Brent or West Texas Intermediate doesn’t just reflect supply and demand; it encodes which flows are considered normal, fungible, and financeable. Discounted Russian grades don’t disappear: they get priced as deviations, which creates arbitrage opportunities for refiners and traders while locking producers and poorer buyers into worse terms.
The third choke point is clearing and settlement. Dollar-denominated trade, Western banks, and compliance regimes mean that even “non-Western” energy trade often passes through Western legal and financial infrastructure somewhere in the stack. Sanctions bite not by stopping barrels, but by deciding which transactions are smooth and which are brittle.
Put together, this means sanctions shift governance away from states and producers toward insurers, traders, and financial intermediaries. That’s not an accident or a side effect; it’s the mechanism. Calling this a targeted foreign-policy response hides the fact that it is a durable reallocation of market authority to actors who are largely insulated from democratic or downstream accountability.
Once you see sanctions as choke-point governance, export controls on advanced technology stop looking exceptional and start looking routine.
The first choke point is fabrication. Advanced semiconductors are not scarce because the physics is rare; they’re scarce because a tiny number of fabrication plants, tooling suppliers, and process licensors define what counts as a “modern” chip. Export controls don’t halt innovation globally; they decide which actors can iterate at the frontier and which are forced onto slower, more fragile trajectories.
The second choke point is tooling and updates. Design software, lithography components, firmware, and maintenance contracts sit upstream of any single device. Cutting access doesn’t brick hardware immediately; it degrades it over time. That temporal asymmetry favors firms and states that already control capital-intensive ecosystems and punishes latecomers who cannot amortize disruption.
The third choke point is standards and compliance. Technical standards bodies, certification regimes, and legal definitions of “dual use” quietly determine what can be sold, where, and under what pretext. As with energy benchmarks, these are presented as neutral technical infrastructure while functioning as mechanisms for disciplining markets.
As in energy, the effect is not to stop production but to relocate authority. Power shifts from engineers and manufacturers toward regulators, licensors, and firms positioned as gatekeepers of legitimacy. And as in energy, the volatility and cost of this reconfiguration are displaced outward—onto smaller firms, peripheral states, and civilian supply chains—while the governing actors remain insulated.
What gets obscured is that this isn’t a temporary response to geopolitical rivalry. It’s the construction of a durable control layer over global production, justified in moral language and defended as inevitability.
What energy sanctions and tech export controls share is not strategy but substrate. Both operate as control layers that use finance, legality, and standards to mediate worsening material conditions rather than resolve them.
At the base level, the problem is not Russia or China. It is declining energy return on energy invested, brittle supply chains, ecological limits, and capital-intensive production regimes that no longer scale smoothly. These are physical and thermodynamic pressures. No amount of diplomatic signaling alters that reality.
The response has been to interpose financial and legal layers between material constraint and political consequence. In energy, sanctions don’t increase net supply or reduce dependence; they stretch time by rerouting flows, extending transport, and pricing volatility into derivatives and insurance. In technology, export controls don’t halt development; they slow iteration, shift risk forward, and force degradation to occur unevenly across actors.
Finance is what makes this governable. Price spreads, discounting, insurance premia, futures, compliance costs, and capital access convert real shortages and declining returns into legible, deferrable risks. Crisis becomes something that can be carried on balance sheets instead of resolved at the level of production or consumption.
This is why these policies persist even when they fail on their stated terms. They succeed at a different task: governing endurance. They decide who absorbs degradation now, who later, and who never. They transform systemic limits into a managed drawdown distributed through markets rather than an immediate political reckoning.
What’s being built, across domains, is not resilience or transition but a financialized buffer around breakdown. The danger is not just that this delays necessary change, but that it exhausts the capacity to change at all by converting every constraint into something that must first pass through finance before it can be acted upon.