US escalates sanctions to cripple Russian oil sector
The White House has announced new sanctions against Russian oil companies, aimed at inflicting losses on Russia amounting to billions of dollars each month. The restrictions target Gazprom Neft and Surgutneftegaz, as well as 183 ships associated with oil exports.
The list of sanctioned entities includes some of the largest Russian oil companies, notably Gazprom Neft and Surgutneftegaz, alongside 183 ships involved in oil exports, referred to as the "shadow fleet." Although the largest Russian oil producer, Rosneft, is not included on the list, the restrictions also extend to financial and insurance institutions managing oil and gas transactions. The new regulations prohibit the purchase of Russian energy resources using dollars.
With today’s actions, we are ratcheting up the sanctions risk associated with Russia’s oil trade, including shipping and financial facilitation in support of Russia’s oil exports, said Janet Yellen, the U.S. Treasury Secretary.
Blockade of LNG projects and leverage in negotiations
The U.S. Department of State has escalated the measures by blocking two active LNG projects and hindering the activities of third-country entities supporting Russian energy exports. White House representatives emphasise that the sanctions impact every stage of the Russian oil trade—from production through transportation to sales—making evasion significantly more costly.
Officials assert that the restrictions are not only aimed at weakening the Russian economy but also at providing the United States and its allies with greater leverage in negotiations with Russia. The future National Security Advisor, Mike Waltz, previously endorsed the idea of such sanctions as a means of exerting pressure on the Kremlin.
Officials within the U.S. administration acknowledged that sanctions were not imposed earlier due to concerns about possible oil price increases. However, conditions in the energy market have since shifted—the supply of resources has risen, and other producers are in a position to fill potential gaps. The decision to impose the restrictions also responds to Ukraine's growing financial needs and seeks to bolster its negotiating stance in the pursuit of peace.
Impact on the Russian economy
Experts predict that the new sanctions will exacerbate the challenges faced by the Russian economy. The decline in the value of the rouble, already nearing historical lows, may heighten inflation, which currently stands at about 10%. The Russian central bank, compelled to further raise interest rates from the record high of 21%, will be under pressure, affecting the financial health of corporations.
The ultimate goal of sanctions is not to punish, but to bring about a positive change in behaviour, summed up a senior White House official.
