WASHINGTON, 24 October 2025 — The United States has imposed sweeping new sanctions on Russia’s two largest oil companies, escalating pressure on Moscow to negotiate a peace settlement in Ukraine and rattling global energy markets.
The US Department of the Treasury’s Office of Foreign Assets Control (OFAC) confirmed Wednesday that the latest measures target Lukoil and Rosneft, along with several of their Russia-based subsidiaries. The sanctions aim to further constrain Russia’s ability to generate revenue from its energy exports, a critical source of funding for its war effort.
Treasury Secretary Scott Bessent said Washington remained ready to intensify restrictions “if necessary” to support President Donald Trump’s broader diplomatic efforts to end the conflict. The announcement came shortly after the indefinite postponement of a planned Trump-Putin meeting in Budapest, with the US President citing concerns about a “wasted meeting.”
The immediate market reaction was swift. West Texas Intermediate (WTI) crude climbed 3.5% to US$60.56 in early Thursday trade, extending gains from the previous session amid mounting supply concerns.
Heightened Market Tensions
“The latest US sanctions on Russia’s largest oil producers represent a significant and unprecedented escalation in Washington’s pressure campaign against Moscow,” Jorge Leon, Head of Geopolitical Analysis at Rystad Energy, said in an e-mail.
Leon noted that the sharp rise in oil prices reflected market fears that Russian crude exports, especially to India, one of its key customers, could fall sharply.
“Combined with the recent wave of attacks on Russian oil infrastructure, these sanctions raise the prospect of major disruptions to Russian crude production and exports, heightening the risk of forced production shut-ins,” he said.
The new restrictions could also test the cohesion of OPEC+, as Russia’s ability to support further output increases becomes limited.
“If Russian production is curtailed, Moscow would find it economically and politically unviable to support further output increases within the alliance,” Leon added.
Analysts Warn of Wider Market Repercussions
Energy analysts say the sanctions could mark a turning point for oil markets already grappling with volatility and uncertainty.
“This move sends a strong political signal, but it also risks destabilising supply chains just as global demand begins to normalise,” said Amelia Chow, Senior Oil and Gas Analyst at Wood Mackenzie. “If Russian barrels are pulled off the market too quickly, we could see renewed price spikes and inflationary pressures across Asia, where refiners remain heavily dependent on discounted Russian crude.”
Chow added that while sanctions are designed to weaken the Kremlin’s financial position, they also “carry unintended consequences for energy-importing nations in Asia, particularly India, which may face higher import bills and tighter margins.”
What Comes Next
As the US tightens its grip on Russia’s energy exports, questions remain over the effectiveness of sanctions in compelling Moscow to return to the negotiating table.
“The big question now is whether Washington’s latest sanctions will be enough to draw Moscow back to negotiations, and, if they fail to do so, what options remain to increase pressure without crossing the line into open confrontation,” Leon said.
For now, the geopolitical and economic stakes remain high, with the next chapter in the global energy story likely to be written not in oilfields, but in diplomatic backchannels.
