Donald Trump has targeted the “economic equivalent of Russia’s crown jewels” with a new wave of sanctions, said Sky News.
The president has slapped fresh restrictions on Russia’s two largest oil companies, in response to what he calls Vladimir Putin’s “lack of serious commitment to a peace process to end the war in Ukraine”.
The new measures, which target Russian giants Rosneft and Lukoil, as well as more than 30 subsidiaries, “aren’t just any sanctions”, said Sky News, they’re a “punch to the gut of Moscow’s war economy”. They’re “no slap on the wrist” because oil is “Russia’s bloodstream”, and Trump “just cut off the blood flow”, said the broadcaster.
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The timing is significant too, said the BBC, because the new measures were announced “just days after the UK sanctioned the same two Russian oil companies”, and European Union countries have issued new measures that ban the import of Russian liquefied natural gas from 2027.
Putin’s “tactical triumph didn’t last long”, said The New York Times – last week “it looked as if the Russian president had outmanoeuvred his adversaries yet again” by making a “deftly placed call” to Trump that “scuttled any expansion in American support for Ukraine”. But yesterday “Russians awoke to new American sanctions against their oil industry”.
The sale of oil and gas accounts for about a quarter of the Russian budget, and Moscow’s oil industry is already under pressure from increasingly long-range strikes by Kyiv. So the measures “take aim at the heart of the Russian economy” and deal a major blow to Putin’s “effort to cajole” Trump into “forcing Ukraine to capitulate to Russia’s main demands”.
Actually, the sanctions are “not a maximal blow,” Daniel Fried, a former US assistant secretary of state for Europe, told Atlantic Council, and there may need to be tougher US actions, such as “joining Europe in lowering the price cap on Russian oil, enforcing the oil price cap by putting sanctions on the Russian shadow fleet of tankers, and sanctioning ports that service them”.
But the measures are still a “strong move” and they could “put even more downward pressure on Russian oil revenues” by pushing Moscow to further discount its oil and “forcing purchasers to consider alternative sources of oil”.
What next?
Some experts in Russia said that the new measures would have a “muted impact”, said The New York Times. Moscow has “become adept at evading restrictions” by using “hundreds of old vessels uninsured by Western companies” and by processing transactions “through buffer companies in third countries”.
So although oil prices “rose sharply” yesterday, the sanctions’ “potential potency” may “ultimately depend on how the penalties are enforced and how energy buyers react to them”.
In response to the move, four Chinese state oil companies have suspended purchases of Russian seaborne oil. Indian refineries have also announced that they will slash imports of Russian crude to comply with the new sanctions. If these cancellations “prove permanent”, Russia “faces a serious economic hit”, said The Telegraph.