U.S. President Donald Trump imposed Ukraine-related sanctions on Russia for the first time in his second term, targeting major oil companies Lukoil and Rosneft. The move comes as Trump grows increasingly frustrated with Russian President Vladimir Putin over the war in Ukraine, which began in February 2022. While these sanctions are a significant development, analysts caution that they are unlikely on their own to force Putin to change course.
The sanctions place Lukoil, Rosneft, and their subsidiaries on the Specially Designated Nationals (SDN) lists, effectively prohibiting international transactions with these firms. The U.S. Treasury Department also flagged potential secondary sanctions for buyers of Russian oil, primarily targeting countries like India and China.
Maria Snegovaya, senior fellow for Europe, Russia, and Eurasia at the Center for Strategic and International Studies (CSIS), highlighted the significance of the move:
“So potentially these sanctions can be very impactful and quite significant because previously the policy of the US administration, mostly Biden administration, when imposing sanctions was to keep the Russian oil on the markets and reroute them from maybe European markets to Indian and Chinese purchases. Accordingly, Rosneft and Lukoil, especially Rosneft was actually under sanctions but relatively limited ones, sectorals, which still allowed it to trade oil. Currently putting these companies and their subsidiaries on SDN lists is prohibitive because, as the Treasury outline flags, there are possible consequences, secondary sanctions for the buyers of Russian oil. In this case, we are talking primarily about India and China, and especially India, given the intensified pressure on it by the Trump administration, including the tariffs imposed before.”
Before these sanctions, Trump had largely relied on trade measures to pressure countries like India for purchasing discounted Russian oil. While previous administrations imposed sectoral sanctions, those measures often allowed Russian oil to continue flowing to key markets. By contrast, the current sanctions directly target the companies and their buyers, representing a new level of enforcement.
Snegovaya emphasised the limits of sanctions, citing Russia’s resilience despite significant losses:
“Despite tremendous casualties that Russia has suffered, the total is, at this point, the total count is above one million. And serious economic consequences. Russia's economy is stagnating at the moment, potentially looming recession. Nonetheless, it hasn't radically altered Putin's calculus to continue this war because the war is being fought on ideological reasons, and Putin and the Kremlin are relatively insulated from the impact of society and the Russian elites.”
She added that the sanctions primarily aim to limit resources available for Russia’s war effort, particularly revenues used for the military-industrial complex:
“Even with shrinking oil revenues, which currently actually constitute about like energy revenue total, constitute about 30 percent of Russia's budget income, so that's significant. Nonetheless, that alone is unlikely to radically alter Putin's calculus just because he's been fighting it for a while. Having said that, what sanctions can achieve successfully is limiting the resources available in Putin's hands to continue this war. Much of the revenues of the budget are being used to fund Russia's military industrial complex.”
Snegovaya noted that sanctions alone are rarely decisive, as Russia often finds ways to circumvent them:
“The sanctions, per se, it's not enough to [unclear] them, because Russia finds a way to circumvent them typically within one, three months. It varies, of course, but in general, it's enough to just introduce sanctions and just let them be. So, from that perspective, the Trump administration finally sends a very important signal to other, you know, purchasers, like customers and all sorts of agents who continue to engage with Russia that there might be serious consequences coming and this administration is going to try and enforce the sanctions design going forward. So, from that perspective it's a very welcome signal even if per se it's unlikely to be highly decisive for this war.”
John Herbst, senior director at the Eurasia Center, Atlantic Council, and former U.S. Ambassador to Ukraine, described the sanctions as “a significant blow” but not a decisive measure:
“Well, this will be another blow and a significant blow to the Russian economy. Rosneft and Lukoil are the major oil companies in Russia. Russia depends upon oil and gas exports for most of its foreign currency. So, they are critical to the operation of the economy. They are not, I would say, a full body blow, but they will add to pressure. They'll reduce oil revenues, further weaken the already stumbling Russian economy. And so, all these things are positive. And beyond that, they are, I would say, first major new Russian sanctions, Trump sanctions on the Russian economy, and that may be the single most important element of today's decision.”
Herbst also pointed out that while Trump is moving in the right direction, further pressure, including military aid, would be necessary to maximize leverage:
“If he really wants Putin to make peace along the lines of his own proposal, he's going to have to put much more pressure on Russia than just what he did today and Tomahawks should be part of that. And ruling them out today, at least for the next year, eases the pressure when he should want to increase the pressure.”
He added that the canceled Budapest summit was part of a broader understanding of Putin’s tactics:
“So Trump seems to be coming to a greater understanding that Putin is up to no good.”
Trump’s new sanctions on Lukoil and Rosneft signal a major shift in his administration’s approach to Russia. While they are likely to increase economic pressure, both Snegovaya and Herbst caution that sanctions alone will not force Putin to end the war. Their primary effect lies in restricting resources for the Russian military, sending a clear message to international actors, and laying the groundwork for more comprehensive measures in the future.
(With inputs from Reuters)
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