US and EU target Russian oil companies funding the war in Ukraine

The US and the EU 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 three and a half 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 was Russia’s biggest oil companies, Rosneft and Lukoil. New US Treasury sanctions threaten their customers in India and China with retaliation that could include being sanctioned themselves.

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

US Treasury secretary Scott Bessent said the move aimed to push Russian President Vladimir Putin to agree to Donald Trump’s proposals for an “immediate ceasefire”.

“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: “Treasury is prepared to take further action if necessary.”

Ukrainian President Volodymyr Zelensky, who has long campaigned for the international community to punish Russia more comprehensively for attacking his country, hailed the new restrictions.

“We waited for this. God bless, it will work. And this is very important,” he said in Brussels.

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 petrol and diesel could face US sanctions themselves if they deal with those companies, and so could their banks.

“Being touched by US 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 a result, India’s major refinery, Reliance Industries’ Jamnagar facility, may reconsider its 600,000 barrels a day of Russian crude imports and is “likely to halt or pause” shipments, 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 discount, he said. “It puts Russia in a tough spot.”

Mr Putin called Washington’s move an “unfriendly act” that could backfire by spiking global oil prices.

He said he warned Mr Trump that an attempt to curb Russian oil exports will destabilise global oil markets and backfire against the US. “A sharp reduction in the amounts of our oil and oil products sent to global markets will lead to price increases,” he said, adding that consumers at US fuel stations will feel the impact.

A Treasury source said the latest action is not expected to significantly affect energy costs for US consumers, and Treasury expects prices to remain stable.

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, taking the total to 557.

The sanctions do not take effect until November 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.

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 ageing tankers to keep shipping oil to Asia to evade a price cap of 60 dollars imposed by the G7 democracies. The cap was an attempt to cut into Russia’s 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.

Ms Perrotta Berlin said Russia has lost about 100 billion dollars (£75 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 civilian and military productions.

Russia had 189 billion dollars (£142 billion) in oil exports alone in 2024 and 154 billion dollars (£115 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 prices, but the jobless rate is low as military spending on weapons and recruitment bonuses keeps factories running.

Mr Putin has the money for now to continue the war and has shown no inclination to accept a ceasefire.