The Trump administration’s decision this week to suspend sanctions on Russian oil at sea should be seen in uncomplicated terms for what it is: a disaster. While it has had little discernible impact on the price of oil on the international market, it will damage the efficacy of Russian sanctions — and in doing so boost the Kremlin’s own coffers.

Even before the move was announced, the Financial Times estimated that the Kremlin would earn as much as $150 million per day in additional budget revenues from higher oil prices. The estimate is based on the fact that the average price for Russia’s benchmark Urals crude blend rose from a little over $50 per barrel to around $75. This is in line with historical discount differences to the international Brent benchmark, as well as additional discounts that Russian-produced oil has had to accept since America sanctioned Russia’s two largest oil companies, Rosneft and Lukoil, last October.

But the move itself is likely to significantly erode that discount for Russian barrels, even if the exemption is not extended beyond its current expiry date of 11 April. The deeper problem lies not in the narrow mechanics of oil pricing, but instead in the signal that Washington has sent to the global market.

Sanctions rarely work simply because they exist on paper. Their effectiveness depends on the behavior they induce among companies, traders and governments which may not themselves be the direct targets of those sanctions. In the case of Russia’s oil trade, much of the pressure on Moscow has come from exactly this dynamic: the fear among third parties that violating US sanctions is simply not worth the risk. This is in no small part because the White House explicitly threatened “secondary sanctions” for violating its blacklists even when there is no direct link to America, something Brussels and the UK are unwilling to do.

The perceived threat towards any state that breaches US sanctions has thus been one of Washington’s most powerful tools. It is precisely why American sanctions have traditionally carried greater weight than similar measures imposed by the UK or the European Union.

The behavior of Russia’s so-called “shadow fleet” — the immediate beneficiary of the waiver — offers a clear illustration of this point. Hundreds of aging tankers now transport Russian oil outside the Western insurance system, often operating through opaque ownership structures. While vessels blacklisted by the UK or EU often continue to find counterparties willing to deal with them, ships sanctioned by the United States are effectively shunned.

This is not because Washington has enforced these measures more aggressively in recent months. In fact, the Trump administration has not sanctioned a single additional Russian shadow fleet vessel since he took office. The difference lies in credibility. For decades, the global financial system has operated on the assumption that crossing US sanctions carries consequences — whether through access to dollar clearing, financial penalties or exclusion from the American market. That assumption has shaped behavior far beyond the jurisdictional reach of US law.

The decision to suspend sanctions on Russian oil shipments, even temporarily, chips away at that credibility. The Trump administration’s move damages the perceived threat for violating US sanctions, as it establishes a precedent that Washington is willing to subordinate Russia sanctions policy — even for oil carried on tankers blacklisted by the EU and the UK — to its other interests. In other words, the premium attached to US sanctions on Russia could begin to disappear.

Even if the exemption expires on 11 April as scheduled, the damage may already be done. Markets respond not just to rules, but to expectations. By signaling that sanctions can be suspended when politically convenient, the administration risks undermining the deterrent effect that made those sanctions powerful in the first place. The result may be more Russian oil flowing more freely — and more revenue flowing back to the Kremlin.