The United States imposed sanctions on Russia’s two largest oil producers, Rosneft and Lukoil, marking the first such action against Russia in President Donald Trump’s second term.
These measures, announced by the US Department of the Treasury’s Office of Foreign Assets Control (OFAC), aim to pressure Moscow into agreeing to an immediate ceasefire in its ongoing war against Ukraine, which began in February 2022.
The sanctions were enacted under Executive Order 14024, targeting entities operating in Russia’s energy sector. The move follows the abrupt cancellation of a planned summit between Trump and Russian President Vladimir Putin in Budapest, Hungary, which Trump described as not “feeling right.”
Treasury Secretary Scott Bessent emphasized that the sanctions address “Putin’s refusal to end this senseless war,” noting that the targeted companies fund the Kremlin’s “war machine.”
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The US has urged allies to join these efforts, with a wind-down period for existing transactions until November 21, 2025. Rosneft state-controlled, led by Putin’s ally Igor Sechin and Lukoil. Nearly three dozen subsidiaries are also affected.
Freezing of all US-based assets owned by these companies. Prohibition on US persons individuals and entities conducting business with them. Threats of secondary sanctions on foreign financial institutions that facilitate transactions involving Rosneft or Lukoil oil sales. Such banks risk losing access to US markets and the dollar-based financial system.
Oil and gas account for about 25% of Russia’s federal budget. Rosneft and Lukoil together produce around 3.1–3.7 million barrels per day (bpd) of oil and gas condensate, representing nearly half of Russia’s crude exports and about 3.3% of global oil output.
Vertically integrated; 49% stake in India’s Nayara refinery 400,000 bpd, reliant on Russian crude; projects in Central Asia, Africa, Latin America. Major exporter to India, China; earned ~$13.28 billion in profit.
Exploration/production/refining; supplies to Hungary, Slovakia, Turkey’s STAR refinery; refineries in Bulgaria (190,000 bpd) and Romania; retail networks in Europe. Key supplier to Europe and Asia; international downstream projects.
Brent crude surged 4.7–5% to $65.53 per barrel, a two-week high, due to fears of reduced Russian supply. This echoes a 1.6% rise after the UK’s similar sanctions last week. The MOEX Russia Index dropped 3.6% to 2,546, its lowest in over a week.
Chinese state oil majors suspended seaborne Russian oil purchases. India’s refiners are reviewing contracts and poised to sharply cut imports—potentially to zero—to avoid secondary sanctions, amid US tariffs of up to 50% on Indian goods as retaliation for past Russian oil buys. This could remove a major buyer for Russia’s discounted crude.
Sanctioned Rosneft and Lukoil last week, warning of global fuel disruptions. EU: Adopted its 19th sanctions package, banning Russian liquefied natural gas (LNG) imports from January 2027. Rosneft is already sanctioned, but Lukoil has exemptions for buyers like Hungary and Slovakia.
Unlike the Biden administration, which delayed sanctioning these firms to avoid inflating energy costs, Trump’s approach combines diplomacy with economic leverage. Trump has expressed hope that the sanctions “won’t be on for long” if peace talks resume, while imposing tariffs on non-compliant allies like India.
Experts view this as a “significant escalation,” potentially constricting Russia’s revenue but risking higher global energy prices. A former Treasury official noted that secondary bank sanctions could be the most effective, as they deter third-party enablers.
However, some analysts doubt immediate impact on Putin without broader targeting of banks or key buyers like China. The sanctions could degrade Russia’s war funding by limiting exports to major markets, forcing discounted sales or rerouting via “shadow fleets.”
Ukraine hailed it as “great news,” while Russia warned of supply disruptions. With nuclear drills underway in Moscow and US restrictions eased on Ukraine’s long-range missiles, tensions remain high. Further US actions are possible if no ceasefire emerges, potentially including asset seizures to aid Ukraine’s defense.