Will Trump’s oil sanctions on Russia hurt Putin and his plans for Ukraine war?

United States President Donald Trump imposed sweeping sanctions on Russia’s two largest oil producers — Rosneft and Lukoil — aimed at tightening financial pressure on President Vladimir Putin and forcing a path toward peace in Ukraine.

The move, announced on Thursday, immediately sent shockwaves through global energy markets, driving oil prices up by 5 per cent and prompting major importers such as China and India to reevaluate their exposure to Russian crude.

Just a week earlier, Trump had spoken of his intention to meet Putin “soon” to work toward ending the war. But that meeting was abruptly called off after what Trump described as a lack of progress in his discussions with the Russian leader.

“We cancelled the meeting with President Putin — it just didn’t feel right to me,” Trump told reporters at the White House.

“It didn’t feel like we were going to get to the place we have to get. So I cancelled it, but we’ll do it in the future.”

Putin, for his part, interpreted the decision as a postponement rather than a cancellation, reminding that the two had already met in Alaska in August.

Despite earlier optimism, the diplomatic atmosphere deteriorated rapidly after Washington’s new economic offensive targeting the core of Russia’s energy revenue system.

The measures compel companies and financial institutions worldwide to cease dealings with Rosneft and Lukoil by November 21.

They also affect 30 subsidiaries affiliated with the two energy giants, both of which are among Russia’s top revenue generators and critical to its ability to sustain wartime spending.

What the sanctions mean for Russia

Rosneft, a state-controlled enterprise, ranks second only to Gazprom in Russia’s corporate hierarchy and produces nearly half of the country’s crude oil.

Lukoil, a private company, is Russia’s largest non-state firm. Together, the two entities account for about 3.1 million barrels of oil exports each day — roughly 70 per cent of Russia’s total crude shipments and over 5 per cent of global oil output.

The US Treasury framed the sanctions as part of a broader effort to cut off Moscow’s key sources of revenue and discourage nations from facilitating its trade. “We encourage our allies to join us in and adhere to these sanctions,” said US Treasury Secretary Scott Bessent.

The sanctions also come alongside European measures: the European Union has adopted its 19th sanctions package, which includes a ban on imports of Russian liquefied natural gas and penalties targeting entities in China and Central Asia that help Moscow sustain energy exports.

In parallel, the United Kingdom announced its own restrictions on Rosneft and Lukoil, estimating that sanctions since the beginning of the invasion have cost the Russian economy more than £28 billion.

Washington’s latest move, however, goes further by striking directly at the companies’ operational capacity to trade oil internationally — something previous US administrations had avoided for fear of destabilising energy markets.

Trump’s administration has dismissed these concerns, arguing that reducing Russia’s wartime income outweighs short-term market instability.

How Putin reacted to Trump’s latest sanctions

Putin reacted publicly within hours of the announcement, rejecting the notion that the sanctions could meaningfully weaken the Russian economy.

He stated that Russia remained indispensable to the global energy system and warned that Western attempts to constrain supply could lead to higher prices worldwide.

“This is, of course, an attempt to put pressure on Russia,” Putin said. “But no self-respecting country and no self-respecting people ever decides anything under pressure.”

The Russian leader argued that cutting off Russian oil would be counterproductive for countries such as the United States that still rely on stable global supply.

Trump, when informed of Putin’s remarks, responded, “I’m glad he feels that way. That’s good. I’ll let you know about it in six months from now.”

Russia’s official stance remains unchanged. The Kremlin insists that its conditions for ending the war — which Kyiv and Western nations regard as tantamount to surrender — have not shifted.

Moscow has also warned that any Western support for Ukrainian strikes deep inside Russian territory would invite “very serious, if not overwhelming” retaliation.

How sanctions rippled through global energy markets

Markets reacted immediately to the sanctions, with oil prices jumping 5 per cent in a single day. The two companies together represent around $105 billion in combined market capitalisation, nearly on par with major Western energy giants such as BP.

Investors responded to the uncertainty surrounding supply disruptions, particularly given Rosneft’s role in producing roughly 6 per cent of global oil.

The sanctions have also placed substantial strain on international energy trade routes.

Chinese state-owned oil firms have reportedly suspended purchases of Russian crude in the near term, while Indian refiners — the largest buyers of seaborne Russian oil — have been forced to plan significant reductions in imports.

Trade intermediaries and banking institutions that facilitate Russian energy transactions, especially in Asia, are expected to come under closer scrutiny.

The US measures could expose them to penalties if they continue dealing with sanctioned entities. Analysts say this may push countries to seek alternative suppliers in the Middle East or Africa, leading to higher costs.

Earlier this year, Trump had already imposed an additional 25 per cent tariff on Indian exports to the United States as retaliation for New Delhi’s continued purchase of Russian oil at discounted rates.

So far, however, China has avoided similar penalties despite remaining Moscow’s largest energy customer.

For India and China, the new restrictions create logistical uncertainty. Both nations significantly increased imports of Russian oil after Europe reduced its purchases following the 2022 invasion.

In 2024, China bought a record 109 million tonnes of Russian crude — nearly 20 per cent of its total energy imports — while India imported 88 million tonnes, compared with less than half a million tonnes before the war began.

How Russia has sustained it’s war economy despite sanctions

Despite years of sanctions, Russia has repeatedly adapted its economy to sustain its military campaign. Its oil and gas revenues, though down by 21 per cent from a year earlier, still represent about one-quarter of the national budget.

The Kremlin primarily collects revenue through production taxes rather than direct export duties, which cushions the short-term fiscal blow from Western sanctions.

Rosneft and Lukoil have already faced declining profitability. Rosneft’s net income for the first half of 2025 fell 68 per cent year-on-year, while Lukoil’s profits dropped by nearly 27 per cent in 2024. Nevertheless, both companies remain crucial to the state’s income stream.

Russia’s domestic policy has shifted toward fully mobilising its economy for war. Enlistment incentives are unprecedented: new recruits receive payments equivalent to the price of an apartment in many regional capitals, and debts of up to 10 million rubles are cancelled for those joining the military.

The government plans to raise value-added tax (VAT) from 20 per cent to 22 per cent in 2026, lowering the revenue threshold that determines which businesses must pay — a move expected to pass additional costs to consumers.

Economic experts argue that these measures reflect Moscow’s strategy of distributing the cost of the war across the population rather than curtailing military spending.

As a result, the Kremlin has been able to maintain troop levels and production capacity despite successive waves of Western economic restrictions.

How has the ‘coalition of the willing’ responded

The European Union’s sanctions policy continues to evolve, with Brussels announcing its 19th package in coordination with Washington.

The bloc has cut its reliance on Russian energy by about 90 per cent since 2022, yet EU member states still imported over €11 billion worth of Russian energy in the first eight months of 2025.

EU leaders met Ukrainian President Volodymyr Zelenskyy in Brussels this week to discuss funding Kyiv’s budget and military needs for the next two years.

The summit, however, stopped short of endorsing a plan to use frozen Russian assets to finance Ukraine, after objections from Belgium. Moscow swiftly warned of a “painful response” if such assets were seized.

Zelenskyy hailed Washington’s latest sanctions as “very important,” but stressed that additional pressure would be necessary to force Russia to negotiate a ceasefire.

Kyiv continues to lobby for long-range missiles and greater Western support amid intense fighting on the front lines.

Russia remains opposed to a ceasefire, arguing that it would merely allow Ukraine to rearm. Moscow claims it has the military initiative, while Ukraine insists that only sustained economic and military pressure will force Putin to the table.

Why Western sanctions on Russia have limited effect

A persistent challenge to the effectiveness of sanctions is Russia’s so-called “shadow fleet” — a vast network of tankers operating beyond Western oversight.

These ships, often registered under obscure flags and without conventional insurance, transport Russian oil and other restricted goods such as stolen Ukrainian grain and dual-use equipment.

The European Union has imposed port bans on 117 vessels believed to be part of this fleet, but enforcement remains difficult. Analysts note that Russia’s ability to redirect exports to non-Western markets has consistently blunted the impact of Western restrictions.

In 2022, Rosneft and Lukoil offset much of their lost European revenue by pivoting to Asia. This adjustment allowed Moscow to maintain export volumes even as European and American buyers withdrew.

The Centre for Research on Energy and Clean Air (CREA) estimated that Russia earned about €546 million per day from fossil fuel sales in September 2025 alone.

If the $47.60 per barrel oil price cap had been fully enforced, the report said, Russian revenue would have been €1.53 billion lower that month.

Despite Western unity on sanctions, the scale of Russia’s energy network and its financial workarounds have limited the immediate damage.

Meanwhile, how Nato is simmering as well

The political and military fallout from the sanctions also spilled into Europe’s security environment.

Lithuania, a Nato and EU member, reported that two Russian aircraft briefly entered its airspace on Thursday, prompting a formal protest and a quick reaction from Nato forces.

Russia denied any violation, but the incident heightened tensions already aggravated by previous such breaches.

Meanwhile, Nato allies remain wary of escalation even as they tighten financial measures. The bloc’s support for Ukraine continues primarily through arms deliveries, training, and humanitarian assistance rather than direct involvement.

In Washington and Brussels alike, the question remains whether sustained economic isolation can substitute for military deterrence in compelling Moscow to end its invasion.

More than three years into Russia’s full-scale invasion, sanctions have become one of the primary instruments of Western policy. Yet their effectiveness is still debated.

As winter approaches, global markets, European governments, and Asian buyers are all recalibrating their energy strategies in response to Washington’s sudden shift.

With inputs from agencies