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The logo of Rosneft company is seen on a LADA Sport Rosneft racing car at the factory museum of Russian automobile manufacturer AvtoVAZ in the city of Togliatti, Russia, August 30, 2023. — Reuters
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WASHINGTON/BRUSSELS: US President Donald Trump, in his second term on Wednesday, imposed sanctions on Russia over Ukraine, targeting oil companies Lukoil and Rosneft as his frustration grows over the war with Russian President Vladimir Putin.
The move comes after EU countries on Wednesday approved a 19th package of sanctions against Moscow for its war on Ukraine, which includes a ban on imports of Russian liquefied natural gas. Trump’s actions followed last week’s approval of Rosneft and Lukol by the UK.
The U.S. Treasury Department said it was ready to take further action as it called on Moscow to agree to an immediate ceasefire in Russia’s war in Ukraine starting in February 2022.
“Given President Putin’s refusal to end this senseless war, the Treasury is approving Russia’s two largest oil companies that fund the Kremlin’s war machine,” Treasury Secretary Scott Besant said in a statement. “We encourage our allies to join us in enforcing these sanctions.”
Oil prices jumped more than $2 a barrel after the U.S. measures, with Brent crude futures extending gains after the settlement, rising to around $64.
The sanctions are a major policy shift for Trump, who has not imposed sanctions on Russia at war and instead relied on trade measures. Earlier this year, Trump imposed additional tariffs of 25% on goods from India in retaliation for buying Russian oil.
The US has not imposed tariffs on China, another major buyer of Russian oil. A $60 price cap on Russian oil imposed by Western countries after Russia’s invasion has shifted Russian oil consumers from Europe to Asia in recent years.
Trump told reporters in the Oval Office on Wednesday that he had canceled a planned summit with Putin in Hungary because it didn’t feel like the time was right.
Trump also said he hoped sanctions on Russian oil companies would not need to be in place much longer. Trump said last year that he favored an early end to the sanctions because of the risks the dollar’s dominance in global transactions could bring. Russia has often demanded payment for oil in other currencies.
‘Can’t be one and done’
Analysts said these steps were a big step and long overdue.
“It can’t be just another job,” said Edward Fishman, a former US official who is now a senior research scholar at Columbia University. He said the question is whether the US now threatens sanctions against anyone doing business with Rosneft and Lukol.
Jeremy Penner, a former sanctions investigator at the Treasury Department and now a partner at the law firm Hughes Hubbard & Reed, said the absence of banks and Indian or Chinese oil buyers in Wednesday’s sanctions meant they “won’t get Putin’s attention.”
However, a senior Ukrainian official said the move was “great news” and that two Russian energy companies had previously been among the targets of Kiev’s proposed US sanctions.
The Treasury also approved dozens of Rosneft and Lukol subsidiaries. These measures block US-designated assets and prevent Americans from doing business with them.
The Russian embassy in Washington and the Russian mission to the United Nations in New York did not immediately respond to requests for comment on the sanctions.
EU targets Russia’s shadow fleet
The EU’s LNG ban will take effect in two phases: six months from January 1, 2027, and short-term contracts will expire after long-term contracts. The total ban comes from a road map proposed by the commission a year ago to end dependence on Russian fossil fuels.
The EU House’s new package also includes new travel bans on Russian diplomats and lists 117 more vessels from Moscow’s shadow fleet, mostly tankers, bringing the total to 558. The list includes banks in Kazakhstan and Belarus.
Four entities linked to China’s oil industry will be listed but the names will not be made public until the official adoption on Thursday, EU diplomatic sources told Reuters. These include two oil refineries, a trading company and an organization that helps produce oil and other sectors.
