US President Donald Trump has announced "huge" new sanctions against two of Russia's largest oil companies in an effort to pressure Moscow to end the war in Ukraine.
The sanctions, announced through Trump's Truth Social platform, target Rosneft and Lukoil - two major oil companies that help fund the Kremlin's "war machine", according to US Treasury Secretary Scott Bessant.
Russian President Vladimir Putin's refusal to end the "pointless war" led to this move, Bessed said in a statement.
This comes a week after the UK imposed similar sanctions on Rosneft and Lukoil and just a day after Trump announced that his planned meeting with Putin in Budapest would be postponed indefinitely, the BBC notes.
"Every time I talk to Vladimir, we have good conversations, but they don't go anywhere. They just don't go anywhere," Trump said on Wednesday, after meeting with NATO Secretary General Mark Rutte to discuss the progress of peace negotiations.
"I just felt like it was time. We've been waiting a long time," Trump said.
But what do the sanctions mean for the companies they target, for the war, and for other countries around the world?
Which companies are targeted by US sanctions?
The sanctions, imposed by the US Treasury Department's Office of Foreign Assets Control (OFAC), effectively blacklist Russia's two largest oil producers.
State-owned Rosneft, led by close Putin ally Igor Sechin, and private company Lukoil account for nearly half of the country's total crude oil exports, according to Bloomberg estimates.
Together, the two companies export 3,1 million barrels of oil per day.
Rosneft alone is responsible for almost half of total Russian oil production, which accounts for 6% of global output, according to British government estimates.
“Rosneft is a vertically integrated energy company specializing in the exploration, extraction, production, refining, transportation and sale of oil, natural gas and petroleum products,” OFAC said in its statement.
Lukoil is engaged in the exploration, production, refining, marketing and distribution of oil and natural gas in Russia and internationally.
How could it affect the war in Ukraine?
Ending the war between Russia and Ukraine has become a key issue for Trump in recent months, but peace negotiations with Putin have proven difficult for the US president.
Trump has repeatedly supported proposals to freeze hostilities along the current front lines, suggesting that the territories should be "divided as they are now."
Russia has opposed this idea, with Kremlin spokesman Dmitry Peskov stating that “Russia’s position remains unchanged,” referring to Moscow’s desire for Ukrainian forces to completely withdraw from the Donbas region in eastern Ukraine.
These new sanctions, targeting such a crucial pillar of the Russian economy, could push the Kremlin to reconsider its stance. At least, that's what the US hopes.
According to Dr. Stuart Rollo, a research fellow at the University of Sydney's Centre for International Security Studies, sanctions have two main objectives.
"To materially affect Russia's industrial capacity to continue the war and to force Russia to accept the terms out of fear of the escalating effects of sanctions on its economy and society," Dr Rollo told the BBC.
"They will not affect the former. They may affect the latter, if a skillful diplomatic balance is achieved between the perceived consequences of continuing the war and the benefits and concessions that will result from a peace agreement," he pointed out.
Michael Raska, an assistant professor at the Military Transformations Program at Nanyang Technological University in Singapore, told the BBC that, in the short term, sanctions are "not likely to change the military balance in Ukraine."
However, he added, "as profit margins shrink, Russia will face difficult choices between maintaining socio-economic stability and financing a protracted war."
Who else could be affected by the sanctions?
These sanctions will certainly hit Russia's economy, as taxes from the oil and gas industries account for about 1/4 of the country's budget.
However, the effects could be felt in much more distant areas.
Oil and gas are Russia's main export products, with Moscow's biggest customers including China and India, the world's two most populous countries, as well as Turkey.
Together, China and India receive the bulk of Russia's energy exports.
Last year, China purchased a record amount of more than 100 million tons of Russian crude oil, which accounted for almost 20% of its total energy imports.
Similarly, oil exports to India, which constituted only a small part of its imports before the war in Ukraine, have increased since 2022 to about $140 billion.
Trump had previously imposed 25% tariffs on products from India in retaliation for the imports in question.
However, he said that Indian Prime Minister Narendra Modi assured him during a phone call on Tuesday that Delhi "is not going to buy much oil from Russia" and that he "wants to see the war between Russia and Ukraine end."
Trump is urging these countries to stop buying Russian oil altogether, forcing them to find alternative suppliers, possibly at higher costs.
However, refusal to do so could lead to China and India suffering secondary sanctions from the US.
Edward Fishman, a former senior US State Department official responsible for sanctions, stressed that the significance of the new US sanctions depends on what happens next.
"Will the US actively threaten secondary sanctions on Chinese banks, UAE traders and Indian refiners doing business with Rosneft and Lukoil?" he asked X.
"I expect, at least, some decline in Russian oil trading in the short term," he said.
On Thursday, a source with direct knowledge of the matter told Reuters that Indian state-owned refiners were reviewing their dealings with Russian oil to ensure that no supplies came directly from Rosneft and Lukoil.
Reliance, India's largest buyer of Russian oil, also said it was adjusting crude oil imports from Moscow in response to the sanctions.
How will it affect global oil prices?
News of Trump's sanctions has already sent global oil prices soaring, with Brent - one of the leading international benchmarks for crude oil - up 5%.
For comparison, Brent rose 1,6% after the UK announced sanctions against Rosneft and Lukoil last week.
The announcement led the Russian embassy in London to warn that targeting major energy companies would disrupt global fuel supplies and raise costs around the world, including for businesses in the UK.
These ominous predictions do not appear to have materialized to a large extent and lag behind the rise seen in recent hours, as Trump's announcement fuels uncertainty.
However, Dr. Rollo estimates that, even in this most recent case, the rise is unlikely to continue.
"In the medium to long term, I don't expect this to affect oil prices globally unless there are strict secondary sanctions on shipping and financing associated with these companies," he told the BBC.
Source: skai.gr
