Two and a half years ago, in the run-up to Russia’s full-fledged war against Ukraine, Moscow was promised “sanctions from hell.” It was widely expected that these sanctions would crush the Russian economy. That did not happen, and one of the reasons was that Russia managed to maintain its oil exports’ prewar volume and revenues. It was clear from the outset that it would be next to impossible to completely eliminate Russian oil from the global markets, but there were strong hopes that the price cap mechanism would at least put pressure on the price and put the cash flows under control of the Western coalition, which might eventually drastically reduce the resources available for the Russian military effort.
Russia, for its part, was determined to keep its oil trade outside of the Western-controlled system—and has succeeded. Initially, Russian crude prices fell significantly, and Moscow had to spend money building up a shadow fleet of tankers, since Western-owned ones were no longer available to it, but the discounts are much smaller now, and oil revenues are higher than pre-COVID and prewar levels. So far, the price cap mechanism has been ineffective.
The price cap mechanism was built on a belief that the West has a monopoly on the services needed to move oil from Russian ports to Asian refineries: that Russia would not be able to manage without Western-owned tankers, insurance underwritten by Western-led P&I clubs, or bank transactions in Western currencies passing through Western banks. That belief turned out to be incorrect. Russia managed to organize a parallel system to handle its oil trade by amassing a shadow fleet and finding alternative insurance providers.
This is a deeply unsatisfying state of affairs for Western policymakers, from both a reputational and practical point of view. First, it undermines the authority of the Western coalition and the effectiveness of future sanctions, since they are dependent on the willingness of potential sanctions violators and violation abettors to take risks, having weighed up the likely losses and rewards. Second, the failure of the price cap keeps Russian coffers full and the war machine running. Accordingly, Western governments are looking for more radical solutions and fixes.
Danish and Finnish officials have announced that they are looking for legal ways to deny passage to ships carrying Russian crude and diesel through marine chokepoints such as the Danish straits, the entrance to the Gulf of Finland, and the English Channel if they are not operating in accordance with the price cap mechanism. In all these cases, the ships would have to pass within 12 nautical miles of Danish, Finnish or Estonian, or English or French shores.
The ships in question often belong to non-Russian owners, sail under non-Russian flags, and carry cargo owned by non-Russian traders. They might have insurance certificates issued by Russian insurers that don’t belong to international insurance clubs, but those insurers had a substantial share of the oil cargo business before the war.
The 1982 UN Convention on the Law of the Sea (UNCLOS), which governs international marine traffic, cites the right of peaceful passage as a fundamental legal principle. In some cases, free passage is governed by much older treaties, such as the 1857 Copenhagen Convention for the Danish straits. Naval blockades have been tools of war and casus belli many times in history. UNCLOS was drafted and signed with the idea of eliminating this source of tensions and lowering the chances of war. As a result, it left very little room for littoral states to hinder the free passage of commercial vessels.
The challenge European policymakers are facing now, therefore, is how to make a blockade—an act often used during hostilities—look like a justified peacetime measure within the framework of conventions written to avoid hostilities. In other words, how to conduct an act of war while technically not conducting an act of war.
Finnish Foreign Minister Elina Valtonen has said: “It’s just not very easy because international maritime law is basically geared towards opening navigation and making it very difficult for any country to intervene with free traffic. The law was built for a completely different world than what we are now looking at.”
It is understandable that the West prefers to take a measured approach in its conflict with Russia, sticking to commercial issues and avoiding any show of physical force. As tempting as it is to use technicalities to pursue strategic goals and justify a forceful course of action in the confrontation between Russia and the West, stopping tankers carrying Russian crude in the Danish straits could prompt an escalation on Russia’s part, such as an armed naval escort.
This approach also erodes trust and respect for the rules-based international order. Rules are commitment devices: their true value is demonstrated when they are applied against the current interests of their authors and proponents. If the conventions signed in the Cold War era are of no use today, then what is? Russia has long accused the West of hypocrisy and has justified its actions by citing double standards and manipulation of the rules to the advantage of the United States and EU. The use of UNCLOS to exercise a naval blockade against Russia will only provide Moscow with another story to tell the Global South.
The West still has the means to enforce the price cap more strictly and more broadly by going after profit-seekers who are willing to help move Russian oil for a fee and turn a blind eye to phony price cap compliance attestation. The West could also threaten secondary sanctions against Chinese and Indian buyers—if it has the will to expend political capital on the issue. But attempts to stop the physical flow of Russian oil through international straits would amount to a blockade, and will be seen as such.
That’s not to say that it’s not the right thing to do—but it should be done with a full and clear understanding of the significance of the act and possible consequences, rather than naively sleepwalking into the next level of conflict.
