US hits top Russian oil companies with sanctions, EU bans Russian LNG
The move came after EU countries on Wednesday approved a 19th package of sanctions on Moscow for its war against Ukraine that included a ban on Russian liquefied natural gas imports
Highlights:
- First Ukraine-related sanctions on Russia in Trump's 2nd term
- Targets Russia's top two oil companies
- EU bans Russian LNG imports in 19th sanctions package
- US sanctions can't be effective if "one and done" - analyst
US President Donald Trump on Wednesday imposed Ukraine-related sanctions on Russia for the first time in his second term, targeting oil companies Lukoil and Rosneft as his frustration grows with Russian President Vladimir Putin over the war.
The move came after EU countries on Wednesday approved a 19th package of sanctions on Moscow for its war against Ukraine that included a ban on Russian liquefied natural gas imports. Trump's measures also followed Britain's sanctioning last week of Rosneft and Lukoil.
Keep updated, follow The Business Standard's Google news channel
The US Treasury Department said it was prepared to take further action as it called on Moscow to agree immediately to a ceasefire in Russia's war in Ukraine, which began in February 2022.
"Given President Putin's refusal to end this senseless war, Treasury is sanctioning Russia's two largest oil companies that fund the Kremlin's war machine," Treasury Secretary Scott Bessent said in a statement. "We encourage our allies to join us in and adhere to these sanctions."
Oil prices jumped more than $2 a barrel after the US measures, with Brent crude futures extending gains after settlement, rising to about $64.
The sanctions are a major policy shift for Trump, who had not put sanctions on Russia over the war and instead relied on trade measures. Trump earlier this year imposed additional 25% tariffs on goods from India in retaliation for its purchasing discounted Russian oil.
The US has not imposed the 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 Russia's oil customers in recent years from Europe to Asia.
Trump told reporters in the Oval Office on Wednesday he had canceled a planned summit in Hungary with Putin because it didn't feel like it was the right time.
Trump also said he hopes the sanctions on Russian oil companies will not need to be in place for a long time. Trump said last year that he likes to remove sanctions quickly because of the risks to the dominance of the dollar in global transactions that the measures can bring. Russia has often asked for payments for oil in other currencies.
'CAN'T BE ONE AND DONE'
Analysts said the measures were a big step and long overdue.
"This can't just be one and done," said Edward Fishman, a former US official who is now a senior research scholar at Columbia University. He said the question was whether the US now threatens sanctions on anyone doing business with Rosneft and Lukoil.
Jeremy Paner, a former sanctions investigator at the Treasury Department and now a partner at law firm Hughes Hubbard & Reed, said the absence of banks and Indian or Chinese oil purchasers in Wednesday's sanctions means they "will not get Putin's attention."
A senior Ukrainian official, however, said the step was "great news" and that the two Russian energy companies were among US sanctions targets proposed by Kyiv in the past.
The Treasury also sanctioned dozens of Rosneft and Lukoil subsidiaries. The measures block US assets of those designated 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 a request for comment on the sanctions.
EU TARGETS RUSSIA'S SHADOW FLEET
The EU's LNG ban will take effect in two stages: short-term contracts will end after six months and long-term contracts from January 1, 2027. The full ban comes a year earlier than the Commission's proposed roadmap to end the bloc's reliance on Russian fossil fuels.
The new EU package also adds new travel restrictions on Russian diplomats and lists 117 more vessels from Moscow's shadow fleet, mostly tankers, bringing the total to 558. The listings include banks in Kazakhstan and Belarus, the presidency said.
EU diplomatic sources told Reuters that 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. These include two oil refineries, a trading company and an entity which helps in the circumvention in oil and other sectors.
