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Oil prices surged following the announcement of substantial new sanctions on Russia’s two biggest oil companies by the US. Brent crude futures, the global oil benchmark, were 3.3% higher Thursday morning.
The new sanctions, which would be the first direct U.S. measures on Russia during the second Trump administration, target Lukoil and Rosneft as well as nearly three dozen of their subsidiaries. Oil is one of Russia’s largest sources of revenue.
The U.S. sanctions could bar foreign countries or companies from conducting business with the oil companies and cut them off from much of the international financial system.
Asked at the White House why the administration had decided to act against the companies at this stage, President Trump said, “I just felt it was time. We waited a long time.” He posted the sanctions list on social media, calling on Moscow to agree to an “immediate cease-fire.”
“Now is the time to stop the killing and for an immediate cease-fire,” said Treasury Secretary Scott Bessent. “Treasury is prepared to take further action if necessary to support President Trump’s effort to end yet another war. We encourage our allies to join us in and adhere to these sanctions.”
The imposition of sanctions is aimed at sending a clear signal that Trump’s patience with Putin is wearing thin as he looks for ways to pressure Russia into a peace deal that ends nearly four years of fighting.
On his way into a meeting of European Union leaders Thursday, Ukrainian President Volodymyr Zelensky welcomed the Trump administration sanctions.
“We waited for this,” he told said. “This is very important.”
“Before today, Rosneft and Lukoil were cut off from U.S. capital markets. Today they are fully cut off from the dollar—all transactions of any kind,” said Eddie Fishman, a former senior State Department sanctions official.
The Treasury Department, in its sanctions notice released on Wednesday, also warned that “foreign financial institutions that conduct or facilitate significant transactions or provide any service involving Russia’s military-industrial base” also “run the risk of being sanctioned.”
Treasury added that transactions with the newly designated entities “may risk the imposition of secondary sanctions on participating foreign financial institutions.”
“A Chinese bank, a U.A.E. oil trader, an Indian refinery—if any of them transact with those Russian companies, they could be hit with U.S. sanctions,” said Fishman.
Penalties on Russia’s ability to sell oil and energy resources are expected to significantly hit the country’s economy. “Russia’s war machine is going to take a severe hit,” said Kim Donavan, a former White House and Treasury official now with the Atlantic Council think tank.
“They’re already having a hard time funding the government and military, so this will affect their ability to continue the war and could be a driving factor to pressure Putin to come to the negotiating table.”
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