President Trump has imposed substantial sanctions on Russia’s two largest oil companies — Rosneft and Lukoil — marking a decisive escalation in U.S. policy aimed at pressuring Moscow amid ongoing conflict in Ukraine. This move targets key players in Russia’s energy sector, which is a critical source of funding for the Kremlin’s military operations.

The sanctions were announced following the collapse of peace talks between the U.S. and Russia, reflecting growing frustration with President Vladimir Putin’s unwillingness to seriously engage in ceasefire negotiations. Treasury Secretary Scott Bessent underscored that Russia’s lack of commitment to ending the war compelled the U.S. to act decisively. “Now is the time to stop the killing and for an immediate ceasefire,” Bessent said, highlighting that Rosneft and Lukoil support the Kremlin’s war machine by generating vital revenue.​

Rosneft and Lukoil are massive entities within Russia’s oil industry. Rosneft alone accounts for nearly half of Russia’s oil production, which makes up about six percent of global oil output. Lukoil is another heavyweight, involved in exploration, refining, and distribution of oil both inside Russia and internationally. The U.S. sanctions freeze their assets in the United States and prohibit American companies from any business dealings with them. Several subsidiaries owned by these firms are also affected, designed to further choke off Russia’s financial channels.​

These sanctions represent a major shift in President Trump’s approach during his second term, as previously his administration had relied more on trade tariffs and lighter sanctions. The current move signals increasing impatience with Moscow’s intransigence. Trump emphasized the significance of the action by calling the sanctions “tremendous” and expressing hope that they will coax President Putin into becoming “reasonable” and agreeing to peace talks.​​

The impact on the global oil market was immediate, with oil prices rising by over $2 per barrel following the announcement. The sanctions effectively discourage the legal sale of Russian oil and put additional pressure on Russia by potentially forcing them to sell at discounted prices or find alternative covert channels. Experts suggest that such measures could significantly reduce Russian oil revenues, squeezing the Kremlins ability to fund its ongoing war efforts.​

One noteworthy aspect is that these U.S. sanctions do not directly target major buyers of Russian oil from countries like China and India, though there is close monitoring of their purchases. Indian refiners, in response, have started reviewing their contracts to ensure compliance with the new sanctions, signaling the broader geopolitical ripple effects of the U.S. decision.

Disclaimer: This image is taken from BBC.