Mike Eckel
The war economy that has fueled Russia’s all-out assault on Ukraine for 45 months has been funded by Moscow’s exports of oil and gas and, critics say, the West’s unwillingness — as well as China and India’s disinterest — to fully turn off the spigot.
Now the United States — along with the European Union and Britain — has taken aim at some of Russia’s biggest oil and gas companies, and their sprawling networks of subsidiaries and affiliates.
The US Treasury Department announced on October 22 that it was sanctioning state-controlled Rosneft and privately owned LUKoil — Russia’s two largest oil companies, whose exports go a long way toward filling the Kremlin’s coffers.
A day later, Brussels targeted Rosneft and Gazpromneft, another major oil company that is a subsidiary of state-controlled gas giant Gazprom.
“These are very big — against their two big oil companies,” US President Donald Trump said at the White House on October 22, describing the sanctions as “tremendous.”
So will it work? Will blacklisting Rosneft and LUKoil run Russia’s war machine dry
Not immediately.
“I think the short-term impact of these sanctions will be limited,” said Aleksandra Prokopenko, a former adviser at the Russian Central Bank, now an analyst at the Carnegie Russia Eurasia Center in Berlin.
“Both companies were likely preparing for them. Furthermore, significant volumes of oil exports are denominated in yuan and rubles, so I don’t expect any dramatic impact on the budget,” she said.
The sanctions were the first significant measures taken by the Trump administration, said Maria Shagina, a researcher at the International Institute for Strategic Studies in Berlin, reflecting frustration with “Russia’s stalling tactics” in efforts to tamp down, or end, the Ukraine fighting.
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