Trump and Europe tighten energy sanctions on Russia: What the new measures mean for the war and global markets

Trump, Europe target Russian energy

For months, President Trump had threatened fresh sanctions on Russia but held back, hoping diplomacy could deliver a cease-fire in Ukraine. That changed this week. On Wednesday, the US Treasury blocked global transactions involving Russia’s two biggest oil companies—Rosneft and Lukoil—accusing them of fuelling Moscow’s “war machine.” The next day, the European Union followed with its own energy sanctions, including a plan to ban imports of Russian liquefied natural gas (LNG) by 2027, the New York Times reported.

The timing marks a sharp shift in tone from Trump’s earlier outreach. Just days before, he had announced—and then abruptly cancelled—a planned summit with Vladimir Putin in Budapest. The sanctions, announced soon after, represent Washington’s first major punitive step against Russia in Trump’s second term and one of the most severe moves against the Russian energy sector since the invasion of Ukraine in 2022.

How Moscow and markets reacted

Oil prices jumped more than 5 percent on the news, reflecting fears of reduced Russian supply. Analysts said the move could push major buyers such as India to reconsider Russian imports. Putin called the sanctions “an unfriendly act,” warning of “an overwhelming response” if Ukraine receives advanced US missiles capable of striking deeper into Russian territory.

The Kremlin insists the new restrictions will hurt, but not cripple, its economy. Energy exports still provide roughly a quarter of Russia’s annual budget, and Moscow has been preparing for tighter sanctions by expanding sales through its “shadow fleet” of tankers and deepening trade ties with Asia and the Middle East.

What’s different this time

Unlike earlier sanctions aimed at smaller players, this round targets the core of Russia’s energy system—companies with global reach and dozens of subsidiaries in refining, shipping, and trading. European leaders also took the additional step of freezing plans for new LNG contracts, which could strain Russia’s ability to fund the war over the long term.

Still, analysts expect the immediate economic shock to be limited. Russian firms have adapted to multiple rounds of sanctions since 2022, rerouting exports through third-party hubs and finding alternative payment channels. As Tatiana Stanovaya of the political consultancy R.Politik noted, “Putin is ready to bear enormous losses to achieve his goals.”

The political calculus in Washington and Brussels

Trump’s move came as European leaders debated whether to use €140 billion in frozen Russian assets as collateral for new loans to Kyiv—a decision now delayed until December. By tightening sanctions, the White House signals renewed commitment to Ukraine even as US aid levels remain uncertain.

Officials close to the administration say Trump had hoped for a breakthrough similar to the cease-fire he brokered in Gaza earlier this month. When Putin rejected that approach, demanding Ukrainian territorial concessions, sanctions became the next logical tool of pressure.

Will the sanctions change the war?

Few analysts expect an immediate shift on the battlefield. Russia’s economy has been refocused entirely toward the war effort, and Putin’s political survival is now tied to the campaign’s outcome. Ukraine, meanwhile, is pressing Washington for Tomahawk cruise missiles to strike Russian supply lines—an escalation Moscow warns would trigger a “harsh response.”

With winter approaching, fighting is likely to slow, giving both sides time to absorb the latest sanctions and reassess. Whether Trump’s new measures push Moscow toward talks or simply harden its resolve remains uncertain.

The global impact

For the rest of the world, the immediate consequence is higher energy volatility. If Indian and Chinese refiners reduce Russian purchases under pressure from US restrictions, oil prices could stay elevated through the winter. European gas markets may also tighten as the LNG ban nears implementation.

For now, the sanctions are as much a political statement as an economic one—marking a return to coordinated transatlantic pressure on Moscow, even as both Washington and Brussels navigate their own divisions over how far to go.