In a concerted effort to undermine Russia’s financial capacity to sustain its war in Ukraine, the United States and the European Union have unveiled a new wave of sanctions targeting Moscow’s oil and gas sectors. The measures, announced on Thursday, aim to disrupt the revenue streams of Russia’s largest oil companies, Rosneft and Lukoil, which account for roughly half of the nation’s oil exports. These exports, alongside natural gas, have historically contributed 30% to 50% of Russia’s state revenues over the past decade. The sanctions also threaten secondary repercussions for major customers in India and China, potentially exposing their refineries and banks to U.S. penalties if they continue dealings with the sanctioned entities. Maria Perrotta Berlin, a sanctions expert at the Stockholm Institute of Transition Economics, likened the impact of U.S. sanctions to a ‘death penalty’ for the private sector. Meanwhile, the EU is phasing out shipments of Russian liquefied natural gas by the end of next year and targeting cryptocurrency platforms used by Moscow to circumvent financial restrictions. U.S. Treasury Secretary Scott Bessent emphasized that the sanctions are designed to pressure Russian President Vladimir Putin into agreeing to an immediate ceasefire in Ukraine. However, Putin has shown no signs of relenting, dismissing the sanctions as an ‘unfriendly act.’ The measures, which take effect on November 21, provide a grace period for traders to wind down operations but also allow Russia to capitalize on short-term oil sales. Analysts warn that while the sanctions may not immediately halt the war, they could significantly degrade Russia’s economy over time. The EU has also sanctioned 117 additional tankers believed to be part of Russia’s ‘shadow fleet,’ bringing the total to 557. Despite the sanctions, Russia’s economy remains resilient, bolstered by prewar oil and gas earnings stored in a national wealth fund. The U.S. and EU, wary of spiking energy prices, have implemented these measures cautiously, giving Russia time to adapt. Nevertheless, experts argue that continued targeting of Russia’s fossil fuel exports is crucial to maintaining pressure on the Kremlin.
Trump’s turnaround on sanctions targets Russia’s oil companies that fund the war in Ukraine
