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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.
