Inside the legal design of America's Russia sanctions U-turn

The first Russian diesel tanker under the new deal between Russia and the United States is now heading for New York with a 40,000-metric-ton cargo, enough to cover barely two hours of American demand.

The deal began with a phone call, in which Russian President Vladimir Putin seems to have persuaded his U.S. counterpart, President Donald Trump, that Russian diesel could ease the energy prices he blamed on Ukraine's strikes.

And the argument appears to have landed. Within a week, Washington had reversed its policy, agreed to a diesel deal, issued a Treasury license opening global markets to Russian diesel, and waived the Graham Act sanctions on Russia's largest oil buyers.

Each step was presented as relief for Americans facing high fuel prices. Beyond the deal's potential electoral dividends for Trump, the legal architecture of these measures tells another story, one that deserves just as much attention.

President Trump has certified to Congress that the waiver serves the U.S. national interest, but has not publicly explained how. What both decisions do is reopen markets, revenue, and payment channels for Moscow, which has secured them without a ceasefire or any other concession to Ukraine.

Anatomy of General License 135

The diesel deal rests on a Treasury license, General License 135, issued on Oct. 9, which lifts U.S. sanctions on Russian diesel imposed in 2014 and 2022. Because those sanctions were set by presidential order, the president could likely lift them, though arguably only after notifying Congress.

What stands out is the license design, which does far more for Moscow than for the Americans it was meant to help. Unlike earlier licenses, which lasted 30 days and covered only cargoes already at sea, GL 135 covers Russian diesel sold anywhere in the world until April 2027, giving Russian exporters six months to supply both existing and new buyers.

Another aspect is that the license covers only diesel. That might reflect its importance to U.S. voters, but it also allows Russia an opening in one of its most valuable export markets, which has been recently targeted by Ukraine.

Who benefits

For American consumers, the gains are limited: the promised volumes equal less than two weeks of U.S. demand. Moreover, the Ending Importation of Russian Oil Act of 2022 still bans Russian energy imports into the U.S. until Ukraine accepts the peace agreement, a condition that has not been met.

Thus, the potential U.S. diesel importers who would rely on the license risk civil penalties up to the value of their cargo and the forfeiture of their ships, which a presidential pardon cannot cancel. With so much at stake, few importers are likely to take that risk, which may explain why Trump presents the deal as supply for "the American and Global Marketplace."

The 2022 import ban applies only to the U.S., so the diesel will go to buyers in the global markets.

There, the license lets traders, shippers and banks handle Russian diesel and take dollar payments without breaching U.S. sanctions, and the proceeds go to Russia’s oil companies.

Meanwhile, Kyiv is under pressure from Washington, which reportedly urged Ukraine to stop striking Russian refineries, the same facilities that now supply the diesel its license has brought back to market.

The Graham Act waiver

In September, Trump signed the Lindsey Graham Act, a law targeting the five largest buyers of Russian energy and entities involved in oil sanctions evasion, which many analysts took as a sign of a tougher line on Russia.

Its main weapon was a tariff of up to 100% on goods from Russia’s biggest energy buyers: China, India and Turkey, which have bought about half, 37% and 5% of its crude exports since late 2022. However, on Oct. 16, two days before these measures were due to take effect, and only a month after signing the act, Trump waived them.

As with the license, the waiver may do little for Americans and a great deal for Russia and its biggest customers.

The sanctions package was designed to push these buyers away from Russian crude oil, which could have driven global oil prices up in the short term. Over time, however, the expectation within the G7 was that other producers would likely fill the gap, leaving Russia with fewer customers, at steeper discounts, and with less income to fund the war.

After the signed waiver, the benefit to American consumers is yet to be seen, while Moscow's revenue will be immediate.

Moreover, the benefits to Moscow extend far beyond its oil customers.

Besides tariffs, the Graham Act aimed to pressure every stage of its oil trade: the shadow fleet, the ports and insurers, state banks such as Sberbank, VTB and Gazprombank, and the Central Bank. Nearly all of this is now on hold. Existing U.S. sanctions on those banks remain, but the waiver gives up the act's reach to the foreign ports, insurers and banks Russia relies on to evade sanctions. In September 2026, Russian-flagged "shadow" tankers more than doubled year on year, carrying 36% of the shadow fleet's oil and making Russia the most common flag in the shadow fleet.

The cost to credibility

The wider cost is the loss of credibility of U.S. sanctions globally.

Washington has pressured India and China to buy less Russian oil by  adding an extra 25% tariff on Indian goods, which was later withdrawn.

The Graham Act was meant to fill that gap and write these secondary tariffs into a law. The waiver shows that U.S. sanctions are less a firm commitment and can shift after a phone call.

Traders in the Gulf, Turkey and Asia, and the shadow fleet may now face lighter compliance requirements, making it cheaper for Russia to reach and sell in the global markets.

The same logic applies to banks and insurers: those that have avoided Russian business may now be more willing to reconsider, potentially allowing Russian money back into the financial system. Meanwhile, the EU, the U.K. and G7 partners still enforce their sanctions, leaving their firms barred from trade that U.S.-linked competitors can now pursue.

A pause or a new direction?

The past week has brought a marked shift in U.S. policy towards Russia and Ukraine.

Over the same period, there were reports of threats to U.S. intelligence sharing and disruptions to Starlink in Ukraine. The moves have drawn rare bipartisan criticism, but it is not yet clear whether that will change anything.

The law may offer firmer ground than politics. Lawmakers argue the diesel license conflicts with the 2022 import ban, which could invite a legal challenge. Some have also called for limits on the president's waiver power. Whether Congress acts will show if it is willing to defend the sanctions it wrote.

The question is whether this is a temporary detour or a new direction.

Pressure from Congress, from European allies, or from Kyiv itself could still pull Washington back towards its earlier policy of backing Ukraine against its aggressor. The deal may settle the matter on its own if it delivers neither lower prices nor progress towards peace; however, ultimately at a major cost to Ukraine and U.S. credibility.

Editor's note: The opinions expressed in the op-ed section are those of the authors and do not purport to reflect the views of the Kyiv Independent.