On October 22, 2025, the United States sent shockwaves through global energy markets by announcing sweeping new sanctions against Russia’s two largest oil companies, Rosneft and Lukoil. This move, the first direct economic punishment imposed by President Donald Trump in his second term, marked a dramatic escalation in Washington’s efforts to pressure Moscow into ending its war in Ukraine. The sanctions, which freeze the companies’ US assets and bar American entities from doing business with them or their thirty subsidiaries, were unveiled just hours after a planned summit between Trump and Russian President Vladimir Putin in Budapest was abruptly canceled amid stalled truce negotiations.
Standing in the Oval Office alongside NATO Secretary-General Mark Rutte, President Trump didn’t mince words about his frustration with the lack of progress. “Every time I speak to Vladimir [Putin], I have good conversations and then they don’t go anywhere. They just don’t go anywhere,” Trump said, as reported by the Associated Press. The president added that he hoped the new sanctions would be temporary, but made clear his patience was wearing thin. The move comes on the heels of yet another deadly Russian bombardment of Kyiv, which killed at least seven people, including children, further galvanizing support in Washington and Europe for tougher measures against Moscow.
The sanctions pack a considerable punch. Rosneft and Lukoil together export 3.1 million barrels of oil per day—about 70 percent of Russia’s overseas crude sales. Rosneft alone is responsible for nearly half of Russia’s oil production, which accounts for six percent of global output. Both companies are economic giants: Rosneft is the Kremlin’s second-largest revenue generator after Gazprom, while Lukoil is the country’s biggest non-state enterprise. Yet both have been battered by recent Western measures and falling oil prices—Rosneft reported a staggering 68 percent year-on-year drop in net income for the first half of 2025, and Lukoil saw profits fall nearly 27 percent in 2024, according to Al Jazeera.
US Treasury Secretary Scott Bessent explained the rationale behind the sanctions in blunt terms: “Putin’s refusal to end this senseless war” made the step necessary, adding that Rosneft and Lukoil “fund the Kremlin’s war machine.” The Treasury Department’s press release also warned foreign financial institutions that “engaging in certain transactions involving the persons designated today may risk the imposition of secondary sanctions.” In other words, banks and intermediaries—especially those in China and India, now Russia’s primary oil customers—could find themselves in Washington’s crosshairs if they continue dealing with the sanctioned companies.
The immediate market reaction was swift and dramatic. Oil posted its largest one-day gain in more than four months. Brent crude, the international benchmark, surged nearly four percent to $65 a barrel, while West Texas Intermediate jumped 5.6 percent to settle near $62 a barrel, according to Bloomberg. Heating oil prices also soared, ending the day up 6.8 percent. While some analysts predicted a correction would follow, the spike underscored how sensitive energy markets remain to geopolitical shocks, especially when they involve major producers like Russia.
But how much damage will these sanctions really inflict on Russia’s economy or its ability to wage war? That’s the million-dollar question. Russian officials have downplayed the likely impact. President Putin, speaking to journalists at the Kremlin, called the sanctions an “unfriendly act” but insisted they would not significantly harm Russia’s economic health. “They are serious in nature and will have certain consequences, but they will not have a significant impact on the health of our economy,” he said, as reported by NBC News. Putin also warned that sanctions on Russian oil could trigger “a sharp increase” in global gas prices, hinting at the potential for blowback in Western economies. He went further, suggesting the timing of the US move was politically motivated: “If you take into account the domestic political calendar in the United States, it is clear how sensitive some processes would be.”
Other Russian officials were even more combative. Dmitry Medvedev, the hawkish former president and now deputy chairman of Russia’s Security Council, declared on social media: “The USA is our adversary, and their loquacious ‘peacemaker’ has now fully taken up the path of war with Russia.” Foreign Ministry spokeswoman Maria Zakharova dismissed the sanctions as “illegitimate” and predicted they would ultimately fail, both at home and abroad. “Our country has developed a strong immunity to Western restrictions and will continue to steadily strengthen its economic and energy potential,” Zakharova insisted.
Yet Western analysts and officials see the picture as far more complex. Daniel Fried, a former US assistant secretary of state, called the sanctions “a welcome warning shot to Putin to knock off the games and maximalism and get serious about ending the war,” according to the Atlantic Council. Kim Donovan, a former White House and Treasury official, predicted “a direct and immediate impact on Russia’s oil profits,” both from legal sales and those via the so-called shadow fleet of tankers that help Russia skirt Western restrictions. The new US measures, Donovan noted, were issued under Executive Order 14024 and crucially include a general license allowing for a wind-down of transactions until November 21, giving major buyers like China and India time to decide whether to stop importing Russian oil or risk secondary sanctions.
Despite the strong rhetoric, experts caution that the sanctions are not a “maximal blow.” Fried pointed out that tougher US actions could involve lowering the price cap on Russian oil, targeting the shadow fleet directly, or even sanctioning ports that service these tankers. John E. Herbst, a former US ambassador to Ukraine, argued that only by “ratcheting up pressure on Moscow” over several months—and by providing more military support to Ukraine—can the US hope to force Putin to the negotiating table. “Trump can only achieve a durable peace if he persuades Putin that the United States and its allies will arm Ukraine to the point that further Russian military gains are not possible,” Herbst said.
The sanctions have drawn praise from Ukraine and its European allies, who are rolling out their own new penalties. Ukrainian President Volodymyr Zelenskyy, speaking in Brussels, said, “We waited for this. God bless, it will work. And this is very important.” The European Union, for its part, is preparing its 19th package of measures against Moscow, including a ban on imports of Russian liquefied natural gas and tighter controls on the shadow fleet.
Still, Russia has proven adept at adapting to Western pressure. After the first wave of sanctions in 2022, Moscow rapidly redirected oil exports from Europe to Asia, with China and India becoming its biggest customers. China imported a record 109 million tonnes of Russian crude last year—almost 20 percent of its total energy imports—while India’s imports soared to 88 million tonnes in 2024. Both figures represent enormous jumps from prewar levels. Commodity trader Felipe Pohlmann Gonzaga told Al Jazeera that while the new US restrictions may make Chinese and Indian buyers more hesitant, “there are always people out there willing to take the risk to beat sanctions.”
President Trump has already signaled he will press China and India to cut back on Russian oil purchases, planning to raise the issue with President Xi Jinping at the upcoming Asia-Pacific Economic Cooperation summit in South Korea. Whether this diplomatic effort, combined with the threat of secondary sanctions, will truly choke off the Kremlin’s oil revenues remains to be seen. As Bill Browder, a prominent Putin critic, put it to NBC News: “This won’t seriously deprive Putin of his war dollars unless we sanction the eight refineries that buy the oil in China, India.”
For now, the world is watching closely as the US, its allies, and Russia maneuver through a high-stakes economic and geopolitical chess game—one with profound consequences for Ukraine, global energy markets, and the prospects for peace in Europe.
