The Biden administration on Friday imposed its largest-ever package of sanctions targeting Russia’s oil and gas revenues in an effort to give Kiev and Donald Trump’s incoming administration leverage to reach a deal for peace in Ukraine.
The move is aimed at cutting off Russia’s oil revenues for the war that began in February 2022, which has killed or injured thousands of people and reduced cities to rubble.
“These measures are the most significant sanctions yet against the Russian energy sector, the largest source of revenue for the Kremlin’s war machine,” a senior Biden official told reporters in a call.
The US Treasury imposed sanctions on Russian companies Gazprom Neft and Surgutneftegas, which explore, produce and sell oil, and 183 vessels shipping Russian oil, many of which are in the so-called shadow fleet of older tankers operated by non-Western companies. These also include networks trading in petroleum.
Many of those tankers have been used to ship oil to India and China as a price cap imposed by the Group of Seven nations in 2022 has shifted much of Russian oil trade from Europe to Asia. Some tankers have shipped both Russian and Iranian oil.
The rationale for the sanctions is to “hit every stage of the Russian oil production and distribution chain,” the official said. If implemented adequately, it could cost Russia billions of dollars per month, the official said.
The sanctions target oil producers, tankers, middlemen, traders and ports.
“There is no step in the production and distribution chain that has been untouched, and that gives us more confidence that theft is going to be even more costly for Russia,” the official said.
The measures allow approved entities a closing period until March 12 to conclude energy-related transactions. Nevertheless, Russian oil trading and Indian refining sources said the sanctions would cause serious disruption to Russian oil exports to its major buyers India and China.
Gazprom Neft said the sanctions were unfair and illegitimate and the company would continue to operate.
Global oil prices jumped more than 3%, with Brent crude near $80 a barrel, ahead of the Treasury announcement, as documents reflecting sanctions circulated among traders in Europe and Asia.
The sanctions are part of a broader effort, as the Biden administration has provided nearly $64 billion in military aid to Ukraine since the invasion. This includes $500 million this week for air defense missiles, air-to-ground weapons and support equipment for fighter planes.
Friday’s move follows U.S. sanctions in November on banks including Gazprombank, Russia’s biggest intermediary for global energy trading, and earlier in the year on dozens of tankers carrying Russian oil.
The Biden administration believes November sanctions helped push Russia’s ruble to its weakest level since the beginning of the invasion and prompted the Russian central bank to raise its policy rate to a record high of more than 20% Inspired to.
A second Biden administration official said, “We expect that our direct targeting of the energy sector will exacerbate these pressures on the Russian economy, which has already pushed inflation to nearly 10% and a bleak outlook for 2025 and beyond. The economic outlook has strengthened.”
leverage
Biden aides have briefed Trump associates about the sanctions. But a Biden official said it is “entirely” up to Trump, who takes office on Jan. 20, to decide when and on what terms he might lift any Biden-era restrictions. Military aid and sanctions “significantly boost his and Ukraine’s leverage in helping the next administration achieve a just and durable peace,” one of the officials said.
The return of Republican Trump to the White House has raised hopes for a diplomatic solution to end Moscow’s aggression, but there are also fears in Kiev that a quick peace could come at a high price for Ukraine.
Trump’s advisers have introduced proposals to end the war that would effectively cede large parts of the country to Russia for the foreseeable future.
The Trump transition team did not immediately respond to a request for comment about the new restrictions.
Any administration seeking to overturn the new restrictions would have to notify Congress and give Congress the ability to take a vote of disapproval, one of the Biden officials said, adding that several Republican members of Congress had asked Biden on Friday. A ban has been requested.
(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)
