TREASURY SANCTIONS RUSSIA FOR LACK OF PROGRESS ON PEACE WITH UKRAINE

OIL GIANTS ROSNEFT AND LUKOIL TARGETED

The U.S. Treasury took a surprising step Wednesday, sanctioning dozens of Russian oil companies for “Russia’s lack of serious commitment to a peace process to end the war in Ukraine.” The move—unprecedented in scope—came just days after the White House visit of Ukrainian President Volodymr Zelenskyy and one day after the White House cancelled a proposed summit with Russian President Vladmir Putin. These are the first sanctions imposed on Russia by the second Trump Administration. The Treasury Department also called on Russia to agree to an “immediate ceasefire.”

The sanctions were targeted on Russian oil giants Lukoil and Rosneft. Any U.S. entity engaging in transactions with either company may face civil penalties. However, the Treasury stopped short of imposing secondary sanctions, merely warning that “engaging in certain transactions involving the persons designated today may risk the imposition of secondary sanctions on participating foreign financial institutions.” The Office of Foreign Assets Control’s decision not to enforce secondary sanctions drew criticism from some observers.

Two projects, the Caspian Pipeline Consortium and the Tengizchevroil were notably spared.

Lukoil posted revenue of $10.12 billion in 2024, a decline of more than 25% over the previous year. In 2024 Rosneft reported revenue of $12.71 billion, down 14% from 2023. At press time, stocks of Lukoil (LKOH) were down more than 5% in heavy trading. Rosneft was down more than 4%.