The Biden administration on Friday imposed its most extensive sanctions package to date, targeting Russia’s oil and gas revenues, in an attempt to give kyiv and the incoming Donald Trump administration leverage to reach a peace deal in Ukraine.
The measure aims to cut Russia’s oil revenues due to the war that began in February 2022and that has caused tens of thousands of deaths and injuries and reduced cities to rubble.
The measures are “the most significant sanctions yet against the Russian energy sectorthe biggest source of income for the Kremlin’s war machine,” a senior Biden official told reporters on a call.
The US Treasury imposed sanctions on Russian companies Gazprom Neft, opens new tab and Surgutneftegas that explore, produce and sell oil and on 183 vessels that have transported Russian oil, many of which are part of the so-called shadow fleet of aging tankers operated by non-Western companies. They also include networks that trade oil.
Many of those tankers have been used to ship oil to India and China, since the price cap imposed by the Group of Seven countries in 2022 has moved much of the Russian oil trade from Europe to Asia. Some of the tankers have shipped Russian and Iranian oil.
The logic of the sanctions “is to reach all stages of the Russian oil production and distribution chain,” the official said. They should cost Russia billions of dollars a month, if enforced enough, the official said.
The sanctions target oil producers, tankers, intermediaries, traders and ports. “There is not a step in the production and distribution chain that is intact and that gives us greater confidence that evasion is going to be even more costly for Russia,” the official said.
The measures allow a liquidation period until March 12 for sanctioned entities to complete energy-related transactions. Still, Russian oil trade and Indian refining sources said the sanctions will cause serious disruption to Russian oil exports to its main buyers India and China.
Gazprom Neft said the sanctions are unjustified and illegitimate and the company will continue to operate.
Global oil prices rose more than 3% ahead of the Treasury announcement, with Brent crude approaching US$80 a barrel,while a document outlining the sanctions circulated among traders in Europe and Asia.
The sanctions are part of a broader effort, as the Biden administration has provided Ukraine with $64 billion in military aid since the invasion. This includes $500 million this week for air defense missiles, air-to-ground munitions and support equipment for fighter jets.
Friday’s move followed US sanctions in November against banks such as GazprombankRussia’s largest conduit for the global energy business, and earlier this year on dozens of tankers carrying Russian oil.
The Biden administration believes the November sanctions helped push Russia’s ruble to its weakest level since the start of the invasion and They pressured the Russian central bank to raise its policy rate to a record level of more than 20%.
“We hope that our direct line against the energy sector will exacerbate these pressures on the Russian economy that have already pushed inflation to almost 10% and will reinforce a tone-deaf economic outlook for 2025 and beyond,” a second Biden administration official said.
Leverage
Biden aides have briefed Trump aides about the sanctions. But a Biden official said he is “totally” dependent on Trump, who takes office in January. 20, when and under what terms any sanctions from the Biden era could be lifted.
Military aid and sanctions “provide the next administration with a considerable boost to its and Ukraine’s influence in brokering a just and lasting peace”said one of the officials.
The return of Trump, Republican, to the White House has raised hopes for a diplomatic resolution to end Moscow’s invasion, but there are also fears in kyiv that a quick peace could come at a high price for Ukraine.
Trump’s advisors have presented proposals to end the war that would effectively cede large parts of the country to Russia for the foreseeable future. Trump’s transition team did not immediately respond to a request for comment on the new sanctions.
Any administration that wants to reverse the new sanctions will have to notify Congress and give Congress the ability to vote disapproval. said one of Biden’s officials, adding that several Republican members of Congress have urged Biden to impose Friday’s sanctions.
