US President Donald Trump has announced “tremendous” new sanctions on Russia’s two largest oil companies, Rosneft and Lukoil, in a bid to pressure President Vladimir Putin into ending the war in Ukraine. The move comes as part of Washington’s escalating efforts to target Moscow’s key revenue sources.
“Given President Putin’s refusal to end this senseless war, Treasury is sanctioning Russia’s two largest oil companies that fund the Kremlin’s war machine,” US Treasury Secretary Scott Bessent said.
Global coordination and sanctions packages
The US sanctions follow similar measures by Britain last week, which also targeted Rosneft and Lukoil. Separately, EU countries approved their 19th package of sanctions against Russia, including a ban on imports of Russian liquefied natural gas (LNG). The US has also urged Japan to halt energy imports from Russia.
These sanctions aim to disrupt Russia’s oil revenues, which account for nearly a quarter of the country’s federal budget. Beyond Moscow, the ripple effect is expected to impact global crude trade as countries reduce reliance on Russian oil.
Impact on major buyers
China and India are among Russia’s largest energy customers. In 2024, China imported over 100 million tonnes of Russian crude, nearly 20 per cent of its total energy imports. India has become the biggest buyer of discounted Russian seaborne crude since the 2022 invasion, importing around 1.7 million barrels per day in the first nine months of the year.
In response to the US sanctions, Indian state refiners, including Indian Oil Corp, Bharat Petroleum Corp, Hindustan Petroleum Corp, and Mangalore Refinery and Petrochemicals, are reviewing bill of lading documents for Russian crude to ensure supplies do not come directly from Rosneft or Lukoil. However, most purchases are made through intermediaries rather than directly from the sanctioned companies.
Analysis and expert views
Edward Fishman, a former senior US State Department sanctions official, noted that the significance of the sanctions depends on enforcement. “How big depends on follow-through: will the US actively threaten secondary sanctions on the Chinese banks, UAE traders, and Indian refineries that transact with Rosneft/Lukoil?” he said, adding that there may be short-term reductions in Russian oil trade but long-term impact hinges on US commitment.
Russia’s reaction
Russia criticised the sanctions, warning that they could undermine diplomatic efforts to end the war. Russian foreign ministry spokeswoman Maria Zakharova said, “We view this step as being entirely counterproductive, including in terms of signalling the need to achieve meaningful negotiated solutions to the Ukrainian conflict.”
She added, “Our country has developed a strong immunity to Western restrictions and will continue to confidently develop its economic potential, including its energy potential.”
Conclusion
The new US sanctions mark a significant escalation in pressure on Russia’s energy sector, which remains the lifeblood of the Kremlin’s economy. How effectively they curb Moscow’s revenues and influence global energy markets will depend on international compliance and enforcement in the coming months.