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The US is imposing sanctions on Russia’s two biggest oil companies, Rosneft and Lukoil, aiming to “degrade” Vladimir Putin’s war chest and support Donald Trump’s effort to end the war in Ukraine.
The move marks the first time the Trump administration has imposed direct costs on Moscow over its full-scale invasion.
“These are tremendous sanctions,” the US president said. “We hope that they won’t be on for long. We hope that the war will be settled.”
Treasury secretary Scott Bessent said: “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.”
Bessent said the US was prepared to take further action. “We encourage our allies to join us in and adhere to these sanctions.”
A number of Russian-based subsidiaries majority-owned by Rosneft and Lukoil have also been sanctioned under the move, which could bar them from all transactions in US dollars.
Ukraine’s ambassador to Washington, Olha Stefanishyna, praised the shift from the US.
“For the first time during [Trump’s tenure] Washington has decided to impose full blocking sanctions against Russian energy companies,” she said. She said the move was “consistent” with Kyiv’s position “that peace is only possible through strength and by exerting pressure on the aggressor using all available international instruments”.
Last week, the UK unveiled sanctions on the two oil majors, while the EU is set to announce its 19th package of penalties on Moscow, including a ban on imports of Russian liquefied natural gas.
Crude oil prices rose more than 4 per cent on expectations that the move would cut Russian supplies to the global market.
“This will further complicate oil exports by Russian companies, something we had already started to see after the UK sanctions,” said Amrita Sen at Energy Aspects.
In 2022, Russian oil majors managed to offset the effects of the western sanctions by pivoting their supplies from Europe to Asia and using a so-called shadow fleet of hastily purchased second-hand tankers.
But by this year their position had worsened sharply as global energy prices fell, and the US hit India with secondary tariffs for purchasing Russian oil.
Sen said the sanctions could push Chinese and Indian buyers to stop buying as much Russian oil — which Trump has demanded.
Wednesday’s announcement by the Trump administration means that Russia’s four largest oil companies have now been hit with US sanctions. Rosneft is the world’s second-largest petroleum producer after Saudi Aramco.
In January, the Biden administration imposed sanctions on Russian oil majors Gazprom Neft and Surgutneftegas but held off imposing penalties on Rosneft and Lukoil over concerns that it could drive up global energy prices.
Trump has grown increasingly frustrated with Putin over the continued war, now in its fourth year.
Trump and Putin spoke over the phone on Thursday last week, after which the US president announced plans to meet with the Russian leader in Budapest.
The planned summit was called off five days later, following a call between US secretary of state Marco Rubio and Russian foreign minister Sergei Lavrov.
“Every time I speak with Vladimir, I have good conversations, and then they don’t go anywhere,” Trump said on Wednesday in the Oval Office.
Asked about the decision to impose sanctions on Moscow, he said: “I just felt it was time.”
The EU’s fresh sanctions will be announced on Thursday after Slovakia agreed to stop blocking the package over concerns about high energy prices.
Danish officials said Russian LNG imports would be banned by January 1 2027, hitting Moscow’s revenues.
The EU will add another 117 vessels from Russia’s “shadow fleet” of oil tankers, which have circumvented earlier controls, and tighten a transaction ban on Rosneft and Lukoil.
Brussels will also hit banks and companies, including a dozen from China and Hong Kong, which it claims have been helping Russia secure parts for drones and other weapons, and some in other countries including India, Thailand and the UAE.
The package also includes a transaction ban on a rouble-pegged cryptocurrency and a related exchange.
The travel of Russian diplomats within the bloc will be limited.
“Sanctions are putting the noose around the neck of the Russian economy and we will tighten that noose,” said a senior EU diplomat.
Additional reporting by Anastasia Stognei in Berlin
