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US announces sweeping sanctions against Russia's 2 largest oil firms
The United States has launched its most comprehensive economic measures against Russia, targeting its two largest oil companies, Rosneft and Lukoil, as efforts to resolve the war in Ukraine remain stagnant. The sanctions, announced by Treasury Secretary Scott Bessent on October 21, 2025, represent a key escalation in President Donald Trump’s strategy to pressure Moscow into halting its military campaign.
The new sanctions freeze all U.S.-based assets of Rosneft and Lukoil and ban American entities from conducting transactions with these firms and their subsidiaries. This move follows similar measures by the United Kingdom and the indefinite postponement of a summit between President Trump and Russian President Vladimir Putin in Budapest. Bessent stated that the sanctions are designed to weaken the Kremlin’s ability to finance its military and sustain its fragile economy, calling on Russia to end what he described as a "senseless war."
Rosneft and Lukoil are critical to Russia's economy, accounting for nearly half of the country’s crude oil exports, approximately 3.1 million barrels per day. The sanctions extend to dozens of subsidiaries involved in oil exploration, production, refining, and technology development, including Saratov Oil Refinery and Taas Yuryakh Neftegazodobycha. Under Executive Order 14024, all entities owned 50% or more by these companies are automatically blocked. The U.S. has set a November 21 deadline for businesses to wind down operations with these firms, aiming to minimize immediate market disruptions while maintaining long-term economic pressure.
The global energy market faces significant uncertainty as major importers of Russian oil, particularly China and India, reassess their positions. In 2024, China purchased over 100 million barrels of Russian oil, while India’s imports reached $140 billion since 2022. Although the sanctions do not directly target foreign buyers, secondary sanctions may affect banks and traders facilitating transactions with the blacklisted companies. Indian oil refiners, including Indian Oil Corporation and Reliance Industries, are already reviewing supply chains to reduce exposure.
Market analysts predict a short-term decline in Russian seaborne oil exports, especially as Asian buyers reduce purchases. However, pipeline deliveries to China could continue, creating uneven impacts on global oil supplies. Meanwhile, the European Union has reinforced its stance by banning Russian liquefied natural gas imports, aligning with Western efforts to isolate Moscow economically.
Rosneft and Lukoil have already felt the strain of previous sanctions and declining oil prices. In early 2025, Rosneft reported a 68% decline in net income, while Lukoil’s profits fell by 26.5% in 2024 due to increased wartime taxation. The latest measures threaten to deepen these challenges, potentially undermining Russia’s long-term energy dominance.
As peace negotiations remain stalled, the U.S. sanctions signal a hardened approach to isolating Russia economically. The Kremlin has yet to respond officially, but the financial and geopolitical consequences are expected to ripple globally in the months ahead.