The Lindsey Graham Act (the Act), enacted on 18 September 2026, introduces a significant new US statutory framework potentially affecting ships and maritime businesses involved in Russian energy trades. The Act also extends the Iran Sanctions Act of 1996 for five years, through to 2031. The practical application of the new Russia-related measures under the Act is, however, dependent to a significant degree on Presidential and Executive action, including the exercise of waiver authority. For the time being, however, the relevant new Russia-related sanctions under the Act have been waived by the President, stating such waiver is on US national interest grounds.
The waiver means these new measures are not presently being applied. However, the underlying legislation remains in place and could become relevant if the waiver is lifted or modified.
Importantly, the waiver does not affect the existing US sanctions regimes relating to Russia, which remain in force. Existing OFAC licences also continue to operate in accordance with their terms, including General License 135, issued on 9 October 2026, which concerns certain transactions related to the importation of Russian-origin diesel into the United States.
The shipping provisions
Section 102 of the Act contains provisions relevant to shipowners and charterers. It provides for sanctions against certain ships connected with Russian energy trades, including ships determined to be:
- used to circumvent US or other sanctions;
- engaging in unsafe or non-standard maritime practices in furtherance of covered Russian energy trades;
- operating without adequate maritime insurance;
- evading applicable Russian oil price-cap requirements;
- knowingly transporting specified Russian-origin oil, natural gas, LNG, petroleum or petrochemical products, coal and other energy products, such as uranium; or
- engaging in certain ship-to-ship transfers involving sanctioned ships.
If enforced broadly, the Act could represent a significant expansion of US sanctions affecting the maritime carriage of Russian products. In comparison to the current sanctions regime, the Act introduces aggressive tariffs of up to 500% ad valorem on all goods imported into the US from Russia. It further targets the top five purchasers of Russian oil and natural gas by imposing 100% ad valorem tariffs on any good imported into the US by those nations. Nearly all major Russian banks and financial institutions are also blocked.
Owners, managers and insurers
The potential exposure is not limited to the ship.
Section 102 also provides for sanctions against certain foreign persons connected with affected ships, including owners, operators, managers, insurers, reinsurers, captains and senior crew, depending on the circumstances.
There remains uncertainty over how broadly some of these provisions will be interpreted, particularly the language concerning a person who knowingly transfers a ship to Russia or “provides for the use of” a ship by a Russian person. The practical scope of this wording will be important if the sanctions are brought into effect.
Exceptions and licences
Section 114 of the Act contains several notable exceptions, including:
- qualifying humanitarian trade, including food, agricultural commodities and medicines;
- non-Russian oil transiting Russia, provided the oil originates outside Russia;
- certain wind-down and divestment activities during a 270-day period;
- supplies required for crew safety, protection of human life or prevention of environmental damage; and
- transactions permitted under applicable U.S. Department of Treasury general licences.
These are targeted exceptions and should not be treated as general permission to undertake otherwise sanctionable business.
Where things stand
The Act is now part of the US statutory sanctions framework, but this does not mean that all of its Russia-related measures are currently operative. The President has exercised authority to waive application of the relevant Lindsey Graham Act sanctions on Russian energy trades, citing the national interests of the United States. The waiver remains in place until further action is considered appropriate. Accordingly, the potentially wide-ranging new sanctions have been paused for the time being.
However, this should not be viewed as a general relaxation of US sanctions against Russia. The pre-existing US sanctions framework remains applicable, and owners must continue to consider existing prohibitions, designations, price-cap requirements and relevant OFAC licences.
The Act also preserves the Treasury’s licensing framework. For example, OFAC General License 135 authorises certain transactions related to the sale, delivery, offloading and importation of diesel fuel of Russian origin, including into the United States, until 7 April 2027. The licence does not authorise transactions involving debits to accounts of the Central Bank of Russia, the National Wealth Fund of Russia or the Russian Ministry of Finance.
However, it is important to note that the EU and UK sanctions regimes continue to prohibit the provision of maritime transport and associated services, including insurance, in relation to Russian-origin diesel unless the relevant transaction falls within the applicable oil price cap exception. As diesel is classified as a “premium-to-crude” petroleum product, the exception generally applies only where the purchase price does not exceed the current price cap of USD 100 per barrel. Importantly, the Act itself remains in place. If the waiver is withdrawn or modified, its broader ship and maritime sanctions could become enforceable.
What to do
Members involved in Russian-related trades should continue to carry out appropriate sanctions due diligence, with particular attention to:
- cargo type and country of origin;
- charterers, shippers, receivers and other counterparties;
- involvement of sanctioned ships or persons, including bunkering barges;
- ship-to-ship transfers;
- applicable price-cap requirements; and
- the terms and conditions of any relevant exception, licence or waiver.
Members should also consider separately all sanctions regimes applicable to the proposed trade, including US, UK and EU measures where relevant.
Members should consult with the Club and potentially outside legal counsel for specific guidance on their individual business transactions.
