These are Isaacson's words, not Musk's. What he said is: "If I had agreed to the request, then SpaceX would be explicitly complicit in a major act of war and conflict escalation"
In my view that is a perfectly valid reason to deny such request even if it was not against the law to do so. On the other hand if you think it should not have been disabled there in the first place then that would mean Russia could use it for their own drone strikes aswell. Considering how invaluable the Ukrainians claim Starlink to be for them I'm sure Russia would be more than happy to take advantage if it as well, which is what they're now doing with the limited amount of terminals they have managed to obtain.
It does not mention US sanctions.
During an All-In Summit appearance on Sept. 11, 2023, Musk returned to the topic and stated that Starlink could not operate in Russia-occupied Ukraine because U.S. sanctions forbade it without special permission.