Trump's turnaround on sanctions targets Russia's oil companies that fund the war in Ukraine

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FRANKFURT, Germany (AP) — The U.S. and the European Union are hitting Russia with another round of sanctions, aiming to cut into oil and gas export earnings that fund Moscow's war against Ukraine.

More than 3 1/2 years into the war, the effort remains a cat-and-mouse game, with Russia finding new ways to get around sanctions, and Washington and Brussels adding new ones and looking for ways to plug enforcement gaps.

The chief target of the latest round: Russia's biggest oil companies, Rosneft and Lukoil. New U.S. Treasury sanctions threaten their customers in India and China with retaliation that could include being sanctioned themselves.

Meanwhile, the EU is phasing out shipments of Russian liquefied natural gas and is going after cryptocurrency issuers, platforms and exchanges that Russia has used to skirt restrictions on its financial dealings with the outside world.

U.S. Treasury Secretary Scott Bessent said the move aimed to push Russian President Vladimir Putin to agree to President Donald Trump's proposals for an “immediate ceasefire” in Ukraine.

“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," he said, adding that “Treasury is prepared to take further action if necessary.”

Here's what to know:

Rosneft and Lukoil account for roughly half of Russia's oil exports, which along with natural gas and oil products have supplied 30% to 50% of state revenues in the past decade. The biggest customers for Russian oil are China, at about 2.1 million barrels per day, and India, at 1.5 million.

Refineries in India and China that buy Russian oil to turn it into gasoline and diesel could potentially face U.S. sanctions themselves if they deal with those companies, and so could their banks.

"Being touched by U.S. sanctions, even secondary sanctions, is like the death penalty for the private sector,” said sanctions expert Maria Perrotta Berlin at the Stockholm Institute of Transition Economics.

As result, refineries in India are "likely to halt or pause purchases for the time being to see how everything unfolds,” said Johannes Rauball, senior crude oil analyst at data analytics firm Kpler. Russia’s unbought barrels could wind up in storage or looking for another customer at a price discount, he said. “It puts Russia in a tough spot.”

U.S. oil prices rose by 5% to $61.44 per barrel Thursday and international benchmark Brent rose 4.7% to $65.52. A Treasury spokesperson, who spoke on condition of anonymity to preview the sanctions, said the latest action is not expected to significantly affect energy costs for U.S. consumers, and Treasury expects prices to remain stable.

Chris Weafer, CEO of the Macro-Advisory Ltd. consultancy, said the biggest takeaway was Trump's willingness to add sanctions to those imposed under the Biden administration.

“This is the first set of sanctions from President Trump after he returned to the White House," said Weafer. “And the fear now is that now that he’s broken, kind of like the seal, as it were, that if he is dissatisfied with any progress with Russia going forward, then he may come with more and more damaging sanctions.”

The EU also added sanctions on Rosneft and sanctioned 117 more tankers it says are part of Russia's shadow fleet used to evade a Western-imposed price cap on Russian oil, bringing the total to 557.

The sanctions don’t take effect until Nov. 21, a grace period that gives traders a chance to wind down business with Rosneft and Lukoil — but also provides a chance for Russia to make more money in the short term.

“You can be sure that every oil buyer in Asia today is trying to find anything that floats that they can buy Russian oil before that sanction kicks in," Weafer said.

The White House may also be hoping Russia will engage in serious talks, enabling suspension of the sanctions, Weafer said.

Sanctions have cost Russia lost oil and gas revenues after the EU cut off most imports of seaborne oil and Russia cut off most natural gas shipments.

Russia spent billions assembling a “shadow fleet” of aging tankers to keep shipping oil to Asia in order to evade a price cap of $60 imposed by Group of Seven democracies. The cap was an attempt to cut into Russia' oil earnings without knocking Russian oil off the global market and causing a price spike, enforced by barring Western insurers and shippers from handling oil priced above the cap.

Perrotta Berlin said Russia has lost about $100 billion in oil and gas sales since the start of the war, and sanctions have raised the costs of imported goods and deprived Russian companies of so-called dual-use goods like computer chips that can be used for both civilian and military productions. Still, Russia had $189 billion in oil exports alone in 2024 and $154 billion in 2025, according to the Kyiv School of Economics Institute.

Russia's economy has seen slowing growth this year and the government's oil revenues have fallen due to lower global oil prices. But the jobless rate is low and military spending is keeping factories running while recruitment bonuses pump money into poorer regions. Putin, who on Thursday called the sanctions an “unfriendly act,” has the money for now to continue the war and has shown no inclination to accept a ceasefire.

One reason: Putin took steps to sanction-proof Russia's economy and reduce dependence on imports after a first round of sanctions when Russia illegally annexed the Crimean Peninsula from Ukraine in 2014. Russia also salted away prewar oil and gas earnings in a national wealth fund and has drawn on that to help keep budget deficits under control.

Jeremy Paner, a former sanctions investigator at U.S. Treasury, said the next step by Washington would be targeting Indian and Chinese purchasers of Russian oil, or going after middlemen and brokers of Russian energy.

“The goal of these sanctions isn’t to stop the war, it's to get serious commitment to engaging in the peace process,” Paner said.

Western governments fearful of a spike in pump and home heating prices for their voters were initially reluctant to cut off Russian oil. It took almost a year after the 2022 full-scale invasion for the EU to end most Russian seaborne oil shipments, and the price cap was announced months before it took effect, giving Russia time to prepare to evade it.

“So many of these measures have been implemented too slowly and ... a little bit at a time so that Russia has had time to adapt and to prepare and to prevent and to react," Perrotta Berlin said.

“It could have been more, but it’s still a substantial impact,” she added. “Continuing to go after the fossil fuels is very important and good.”

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Fatima Hussein in Washington and Harriet Morris in Tallinn, Estonia, contributed.