How sanctions are redrawing global energy and trade flows in 2026

At sea, a tanker makes the kind of turn that never shows up on a petrol station receipt. It was meant to head for a short hop into Europe. Instead it swings south, then east, chasing a buyer willing to take the cargo and able to pay for it.

That’s the quiet power of sanctions. They’re not just “bans”. They’re rules that can block money, ships, insurance, port services, and even the paperwork needed to prove where a barrel came from. Energy doesn’t simply vanish when sanctions hit, people still need heat and transport. What changes is the route, the buyer, the price, and the risk.

This matters at home because friction in energy trade shows up fast, in fuel prices, heating bills, factory costs, and the odd headline about “mystery” shipments. Sanctions rarely stop energy demand, they redirect supply through longer, costlier paths that can snap under stress.

What sanctions actually block, and why energy keeps flowing anyway

Most sanctions regimes aim at the cash and the logistics, not the molecules. That’s why barrels and cargoes often keep moving, just with more obstacles.

The main tools tend to look like this:

• Export bans: a producer is barred from selling certain fuels, kit, or services to specific markets.
• Import bans: buyers are banned from taking cargo directly from a sanctioned country.
• Price caps: buyers can purchase, but only under a set price if they want access to Western shipping and insurance.
• Shipping and insurance limits: ships, insurers, and brokers can be barred from handling cargo tied to a sanctioned seller.
• Bank and payment blocks: banks can’t clear payments, issue letters of credit, or finance deals for sanctioned parties.
• Secondary sanctions: third parties can be punished for trading with the target, even if they’re outside the sanctioning country.

A simple chain from wellhead to petrol pump shows where the bite lands. Crude is lifted and sold. A trader finances the cargo. A shipper moves it. An insurer covers it. A refinery processes it. A distributor sells petrol. Sanctions can hit at every handover, not just at the border.

That’s the key difference between removing supply and adding friction. Friction means longer routes, fewer compliant tankers, higher insurance premiums, extra intermediaries, more checks, and more time. The oil might still arrive, but it arrives later and costs more to move.

Enforcement is the real thermostat. Written rules matter, but so does how hard authorities push, which companies get named, and whether penalties land quickly. When enforcement tightens, even legal trades slow down because firms don’t want a compliance mistake turning into a headline and a fine.

The bottlenecks are often boring: insurance, finance, paperwork, and ports

The most powerful choke points are rarely dramatic. They’re back-office approvals, risk committees, and port rules.

Insurance is a classic gate. Without reputable cover, many ports and counterparties won’t touch a ship. Even when insurance exists, premiums rise if the route is longer, the vessel is older, or the ownership is hard to trace.

Finance is another pinch point. A cargo can be “sold”, but if banks won’t handle the payment, it’s like selling a house to someone who can’t legally transfer the money. Letters of credit, currency conversion, and shipping documents can all jam up.

Then there’s paperwork. Cargo history matters more than ever. A barrel can be blended, swapped, refined in a third country, or re-exported with a new description. That doesn’t automatically make it clean. Many firms now demand deeper proof because the risk isn’t only getting caught on purpose, it’s breaching rules by accident.

Port services add another layer. Bunkering, pilots, repairs, and inspections can be refused if a vessel is flagged as high-risk. That turns “we found a buyer” into “we can’t safely dock”.

The big reroute map: who buys from whom now, and how the routes changed

Since 2022, energy trade has started to resemble a river forced into new channels. It still flows downhill, but it spreads, loops back, and cuts fresh paths through new terrain.

Europe’s break from Russian pipeline gas pushed the continent into a global bidding contest for liquefied natural gas (LNG). Cargoes that might once have gone to Asia were pulled into European regas terminals. That shift didn’t just change suppliers, it changed exposure. Pipeline gas behaves like a steady tap. LNG behaves more like a fleet of delivery vans, flexible but sensitive to traffic, weather, and price.

At the same time, Russia’s crude and product exports pivoted away from short-haul European destinations towards longer trips into Asia, often at discounts. Reports in early 2026 continue to describe Russia sending most of its seaborne oil to Asian buyers, with India and China central to that trade. Some estimates cited in public reporting suggest India’s purchases rose from under 100,000 barrels a day before 2022 to around 1.8 million barrels a day on average in 2025.

The change isn’t only “Europe bought from A instead of B”. It’s the rise of intermediaries. More cargoes now pass through hubs and middlemen that specialise in risk pricing, documentation, and re-routing. That can keep energy moving, but it can also blur visibility, which is exactly what regulators and insurers dislike.

To see the scale of scrutiny and tracking, the Atlantic Council’s Energy Sanctions Dashboard offers a clear view of how sanctioned barrels are rerouted and the tactics used to disguise origin.

Europe’s switch to LNG: more ships, more suppliers, more exposure to global prices

Europe’s gas story is now written on shipping schedules. LNG has become a major part of the mix, and 2025 was widely reported as a record year for European LNG imports, at around 142 bcm, with the US taking a large share of supply.

This shift brings choice, but also new headaches.

First, Europe is more exposed to global gas prices. LNG cargoes go where they earn the most. When Asia has a hot summer or a cold snap, Europe feels it. When European storage looks low, Asia feels it too.

Second, Europe has become more dependent on shipping lanes and port capacity. A pipeline doesn’t care about storms in the Atlantic. LNG does. A queue at a terminal, a strike, or a temporary outage can tighten the market quickly.

Third, there’s more seasonality. In a pipeline-heavy world, prices still moved, but the system had fewer moving parts. In an LNG-heavy world, winter planning becomes a constant exercise in storage, cargo timing, and demand control.

Policy adds pressure in the background. The broad direction in Europe is to reduce remaining reliance on Russian gas, including LNG, over time. For businesses, that means the question isn’t “is there enough gas in the world?” but “is there enough gas, on the right ships, under the right rules, arriving on time?”

For a useful market-level discussion of how sanctions and trade shifts interact, see the S&P Global podcast on sanctions and shifting oil flows in 2026.

Russia’s pivot to Asia and the longer, pricier journey for each barrel

Distance is a cost you can’t argue with. A cargo that once moved from Russia to a nearby European port can now travel thousands more miles to India or China. That ties up tankers for longer and reduces how many trips the same ship can make in a year.

Longer journeys also amplify smaller problems. A delayed payment, a paperwork snag, or a mid-voyage re-route can ripple through supply. When a ship is tied up for weeks longer, the whole system needs more vessels to move the same volume.

Discounts have been the grease in the gears. Buyers often want a price that reflects the extra compliance risk and the weaker pool of services available. But discounts don’t remove uncertainty. When enforcement tightens, even big buyers can pause.

Public reporting in late 2025 described new US measures hitting major Russian oil firms, and some buyers in China and India reportedly reduced or paused imports. Those moments matter because they can briefly strand supply, pushing other buyers to scramble for alternative barrels and lifting prices elsewhere, even if total global production hasn’t changed.

In other words, sanctions don’t just shift who buys. They change how confident traders feel about the next deal, and confidence is its own kind of supply.

Workarounds that reshape trade: shadow fleets, ship-to-ship transfers, and ‘clean’ paperwork

When official routes narrow, unofficial routes widen. That’s not a moral judgement, it’s a pattern seen across many sanctions regimes.

The methods tend to be practical, not glamorous:

• Shadow fleets: older tankers with opaque ownership and rapid changes in flags, managers, and insurers.
• Switching off trackers: AIS transponders may go dark in certain areas, making it harder to verify movements.
• Ship-to-ship transfers: cargo is moved at sea, which can blur origin and break the chain of visible custody.
• Blending and re-labelling: fuels can be mixed, then sold with a new description that’s harder to trace.
• Re-exports through third countries: crude or products enter a hub, then leave with new paperwork.

These workarounds reshape trade because they create a parallel market with its own pricing. Risk is priced in, and someone always pays it: the seller through discounts, the shipper through higher costs, or the buyer through uncertainty.

They also come with real trade-offs:

Higher accident risk: older ships and complex transfers raise the chance of spills and mechanical failure.

Higher insurance costs: even when cover exists, it often costs more, and claims can become disputed if rules were breached.

Legal exposure: traders and service providers face penalties if authorities decide a structure was built to dodge rules.

More scrutiny of products: regulators increasingly look beyond crude and focus on refined fuels and petrochemicals linked to sanctioned inputs.

For a business-facing view of how sanctions risk spreads across supply chains, the Pinsent Masons analysis on the “spider effect” of sanctions is a useful reminder that one risky link can taint the whole chain.

Why “made somewhere else” doesn’t always mean “not sanctioned”

A common assumption is that refining in a third country wipes the slate clean. That’s not always how rules and enforcement work in practice.

Some measures target origin and derivation, not just the final shipping point. If a refinery imports crude linked to a sanctioned producer, authorities may scrutinise the refined products, the financing, and the services used to produce and move them.

Picture a refinery that buys discounted crude, then sells diesel to a different region. The diesel may look ordinary. The paperwork may say the exporting country is not sanctioned. But buyers now ask harder questions: What crude inputs were used? Which ships carried them? Which insurers covered them? Were any sanctioned parties involved in the transaction chain?

This is why “proof” has shifted from a single certificate to a bundle of evidence. Compliance teams want vessel histories, counterparties, and documentation that stands up to audits. That demand slows trade, adds cost, and pushes smaller firms out of the market.

What this means in 2026: prices, winners and losers, and the next pressure points

By January 2026, the lesson is clear: sanctions make energy trade more complex and more fragile. That fragility shows up as price jumps from events that once felt minor.

When routes are longer and the compliance net is tighter, small disruptions matter more: a delayed LNG cargo, a blocked payment route, a port refusing a high-risk tanker, or a sudden sanction announcement that spooks buyers. Any one of these can tighten supply in a region for days or weeks, and markets hate uncertainty.

There are also emerging “lanes” in global trade. Western-aligned shipping, finance, and insurance systems still dominate much of the legal trade, but parallel networks have expanded. The gap between those lanes isn’t only political, it’s commercial. It changes freight rates, access to services, and how quickly cargoes can be re-routed.

Winners and losers tend to follow incentives:

• Often winning: LNG exporters with flexible supply, shipping and compliance firms, and hubs that can provide storage, blending, and paperwork.
• Often losing: consumers during price spikes, coastal states exposed to spill risk from older fleets, and companies caught between fast-changing rules and slow-moving contracts.

Pressure points to watch next are simple ones. Secondary sanctions risk can chill buying overnight. Checks on shipping and refined products can tighten without warning. Investment also shifts, towards LNG capacity, storage, and new routes that reduce choke points.

For a broader view of political and legal risk facing firms in 2026, the Steptoe risk outlook on the new rules for global business captures why sanctions now sit alongside tariffs and export controls as day-to-day commercial factors.

Conclusion

Sanctions redraw global energy and trade flows by changing incentives, not by switching demand off. The oil still needs a buyer, the gas still needs a ship, and the payment still needs a path, so trade reorganises itself around new constraints.

Once you see sanctions as friction, today’s weird headlines make more sense, tankers taking long routes, new middlemen, sudden price pops, and growing focus on paperwork. The practical takeaway is to watch the plumbing: shipping access, insurance rules, LNG capacity, and enforcement signals, not just production numbers. In 2026, trade rules can move prices as fast as a storm.