The Biden administration has announced its most extensive package of sanctions to date targeting Russia’s oil and gas revenues, aiming to weaken Moscow’s ability to fund its war in Ukraine. The move, unveiled on Friday, comes as part of a broader U.S. strategy to support Kyiv while bolstering leverage for peace negotiations under incoming President Donald Trump.
The sanctions target Russia’s energy sector, the largest source of revenue for President Vladimir Putin’s government. Since the February 2022 invasion of Ukraine, the war has resulted in over 12,300 civilian deaths and the destruction of numerous Ukrainian cities.
Ukrainian President Volodymyr Zelensky described the sanctions as a significant blow to Moscow. “The less revenue Russia earns from oil… the sooner peace will be restored,” Zelensky said on social media platform X.
Daleep Singh, a top White House adviser, stated that the measures represent the “most significant sanctions yet on Russia’s energy sector.”
The U.S. Treasury has imposed sanctions on Gazprom Neft, Surgutneftegas, and 183 vessels involved in shipping Russian oil. Many of these vessels belong to the “shadow fleet,” a network of aging tankers operated by non-Western companies to bypass sanctions. The measures also target companies and networks facilitating the trade of Russian petroleum.
Since the Group of Seven imposed a price cap on Russian oil in 2022, exports have shifted from Europe to markets in India and China. Several sanctioned vessels have reportedly carried both Russian and Iranian oil.
The Treasury also revoked an exemption allowing the intermediation of energy payments through Russian banks. This change could cost Russia billions of dollars monthly if the sanctions are effectively enforced, officials said.
“There is not a step in the production and distribution chain that’s untouched,” one official added, signaling increased costs for Russia’s evasion tactics.
Gazprom Neft condemned the sanctions as unjustified and pledged to continue its operations. Meanwhile, global oil prices rose more than 3%, with Brent crude approaching $80 per barrel. Traders cited anticipated disruptions in Russian exports to India and China as a primary factor.
The Biden administration has emphasized that new oil supplies expected from the U.S., Guyana, Canada, Brazil, and potentially the Middle East will mitigate the impact of lost Russian oil on global markets. “We’re no longer constrained by tight supply in global markets,” said Geoffrey Pyatt, U.S. assistant secretary for energy resources.
The sanctions complement the $64 billion in military aid provided by the U.S. since the invasion began, including $500 million this week for air defense systems and fighter jet support.
U.S. officials believe the economic pressure will exacerbate existing challenges for Russia’s economy, which is already grappling with inflation nearing 10% and a bleak outlook for 2025 and beyond.
The incoming Trump administration, which takes office on January 20, will determine whether the sanctions remain in place. However, reversing the measures would require congressional approval.
“Trump’s people can’t just come in and quietly lift everything that Biden just did. Congress would have to be involved,” said Jeremy Paner, a partner at Hughes Hubbard & Reed.
While Trump’s return has raised hopes for a diplomatic resolution, concerns linger in Kyiv over the potential cost of peace negotiations. Some of Trump’s advisers have proposed concessions that would cede significant Ukrainian territories to Russia.
“The sanctions and military aid provide the next administration with substantial leverage in brokering a just and durable peace,” a U.S. official noted.
reuters
