The Dynamics of Evasion: The Price Cap on Russian Oil Exports and the Amassing of the Shadow Fleet

To reduce Russia's funding for its Ukraine invasion, Western governments imposed, after a delay, a price ceiling on Russian seaborne oil exports utilizing Western services. To evade that ceiling, Russia developed a "shadow fleet" using no such services. We simulate a calibrated model driven by this fleet's expansion to assess various sanctions. Mainly, sanctions-from a price ceiling to its extreme service ban version-significantly reduce the present value of Russia's profits. However, tighter price caps will not necessarily harm Russia if they raise the world price. Shortening the delay between sanctions announcement and implementation can harm Russia more.