Will U.S. Sanctions on Russian Oil Companies Be Effective, and Why Is Trump Imposing Them Now?

The United States has announced new sanctions against Russia’s two largest oil companies, marking a major shift in Donald Trump’s approach to ending the war in Ukraine. The measures targeting Rosneft and Lukoil are the first sanctions imposed by the U.S. against Russia since Trump returned to office in January. 

U.S. Treasury Secretary Scott Bessent said the sanctions were necessary because of “Putin’s refusal to end this senseless war,” adding that the targeted companies were responsible for financing the Kremlin’s “war machine.” He also noted that Washington was prepared to take further action if necessary. 

Trump described the sanctions as “tremendous,” but experts are divided over how effective they will be in slowing Russia’s war effort or bringing Vladimir Putin to the negotiating table. Many argue that their impact will depend on how aggressively the U.S. enforces them. 

Although Russia’s short-term financial impact may be limited, this move signals Trump’s intent to squeeze Moscow’s finances and pressure the Kremlin into a peace agreement after more than three and a half years of war in Ukraine. 

Putin denounced the sanctions as a hostile act, claiming they would not significantly affect Russia’s economy and emphasizing the country’s importance to global energy markets. He warned that a sudden drop in supply would raise prices, creating discomfort for countries like the United States. 

 “This is, of course, an attempt to pressure Russia,” Putin said. “But no self respecting nation and no self-respecting people make decisions under pressure.” 

When asked about Putin’s remark that the sanctions would have little effect, Trump responded: 

 “I’m glad he feels that way. That’s good. I’ll let you know in six months.” 

Following Ukraine’s recent requests for long-range missiles from its U.S. and European allies to shift the course of the war, Putin warned that Moscow’s response to attacks deep inside Russia would be “very serious, even overwhelming.” 

What Was Announced? 

The Treasury Department’s sanctions freeze all assets of Rosneft and Lukoil in the U.S. and prohibit American individuals and companies from doing business with them. The measures also extend to dozens of subsidiaries owned by the two companies. 

Additionally, the U.S. threatened secondary sanctions against foreign financial institutions that continue to conduct transactions with Rosneft and Lukoil — a move that could affect banks facilitating Russian oil sales in China, India, and Turkey. 

Rosneft and Lukoil together account for nearly half of Russia’s crude oil exports. Both companies were sanctioned by the U.K. last week, and the European Union is expected to announce new sanctions against Russia on Thursday. 

Why Now? 

During his 2024 campaign, Trump promised that if elected, he would “end the war in 24 hours.” However, since returning to the White House, he has realized that the task is far more complicated. His stance on the war has shifted — from saying Ukraine could reclaim all territory lost since the 2022 invasion to now suggesting that the country might need to accept a division in which much of the Donbas region remains under Russian control. 

Trump abruptly withdrew from a planned second summit with Putin this week after reports emerged that his administration was frustrated with Russia’s preconditions for the meeting. Speaking to reporters Wednesday, he said: 

“Every time I talk to Vladimir, we have good conversations, and then they go nowhere,” expressing clear impatience with the stalled negotiations. 

Despite resistance from his allies in Congress who pushed for tougher measures, growing frustration with Russia’s unwillingness to compromise and ongoing lobbying by European partners appear to have changed Trump’s calculus. 

Will It Work? 

Energy revenues account for roughly a quarter of Russia’s federal budget, and the new sanctions could further restrict Rosneft and Lukoil’s ability to operate internationally, increasing pressure on Putin. 

Marshall Billingslea, who served in the Treasury Department during Trump’s first term, said the threat to penalize banks dealing with Russian oil could be one of the most critical aspects of the plan: 

“Even if Indian, Chinese, or Turkish refiners want to keep buying, their banks might say no.” 

However, Thomas Graham of the Council on Foreign Relations urged caution, telling Bloomberg: 

 “If the White House believes these sanctions will lead to a radical change in Kremlin behavior or Putin’s policies, it’s deluding itself. The Kremlin has become very adept at circumventing such measures.” 

Others speculate that Russian oil exports to India, one of Moscow’s key markets in recent years, could drop sharply due to the new sanctions. Energy analyst Thomas O'Donnell suggested that Trump has been pressuring Indian Prime Minister Narendra Modi to halt imports, and the new measures could allow Indian refiners to exit long-term contracts more easily. 

 “This is huge,” O'Donnell said. “It could cripple Russia as an energy superpower.” 

Ultimately, the sanctions’ effectiveness will depend on how aggressively the U.S. enforces its threats against banks and intermediaries working with Rosneft and Lukoil. The Biden administration had previously avoided such sanctions, fearing higher energy prices at a time when inflation was finally easing. 

By Thursday, there were early signs that the sanctions were already having an impact: reports suggested that Russia’s biggest energy clients — India and China — had suspended some oil imports in response to the new measures. 

Still, it remains uncertain whether the sanctions will bring Putin to the negotiating table. While they could severely cut Russia’s revenue, Putin has previously indicated that he is willing to let ordinary Russians endure economic hardship to continue what he portrays as an existential struggle in Ukraine. 

Trump’s Latest Break with Putin 

Trump said Wednesday that he canceled the planned summit with Putin because it was “not going to get us where we need to go.” 

“We canceled the meeting with President Putin; it just didn’t feel right,” Trump told reporters at the White House. “I felt we weren’t going to get to where we needed to be. So I canceled it — but we’ll meet in the future.” 

Putin later suggested that Trump likely meant the summit was postponed. The two leaders last met in Alaska in August. 

Russia, meanwhile, has signaled that its conditions for ending the war remain unchanged — terms that Kyiv and many European countries view as tantamount to surrender. 

As European Union leaders and Ukrainian President Volodymyr Zelenskyy met in Brussels on Thursday to discuss continued financial aid for Kyiv, fighting on the ground intensified once again. 

Reference:

Yerushalmy, J. (2025, October 23). Will US sanctions on Russian oil companies be effective, and why is Trump imposing them now? The Guardian. https://www.theguardian.com/world/2025/oct/23/will-us-sanctions-russia-oil-companies-be-effective-why-trump-now 

Osborn, A., Mason, J., & Gardner, T. (2025, October 23). Putin defiant after Trump sanctions Russian oil companies over Ukraine. Reuters. https://www.reuters.com/world/europe/trump-sanctions-russian-oil-majors-prompting-oil-price-rise-india-jitters-2025-10-23/