The United States has unveiled its most substantial economic measures against Russia since President Donald Trump returned to office in January, targeting the country’s two largest oil companies, Rosneft and Lukoil.
The sanctions, announced by the U.S. Treasury Department on Wednesday, coincide with President Trump’s sudden decision to cancel a planned summit with Russian President Vladimir Putin in Budapest, signaling a sharp reversal in Washington’s diplomatic approach to the war in Ukraine.
The new restrictions, which also ensnare nearly three dozen subsidiaries of the two oil giants, mark an escalation of Western pressure aimed at degrading Moscow’s ability to finance its military campaign. The move follows months of diplomatic maneuvering by President Trump, who had repeatedly held off on new sanctions while pursuing a negotiated end to the conflict.
Shift in Diplomatic Posture
The sanctions were announced hours after President Trump confirmed the cancellation of his anticipated meeting with President Putin in the Hungarian capital. The decision represents the latest shift in the U.S. president’s often-fluctuating position on the war. Just days prior, following a telephone call with the Russian leader, President Trump had announced he would meet with Putin within two weeks and had reportedly refused to transfer long-range Tomahawk missiles to Kyiv.
Explaining his decision to postpone the Budapest summit, President Trump voiced frustration with the lack of progress in negotiations.
“We canceled the meeting with President Putin. It just, it didn’t feel right to meet. It didn’t feel like we were going to get to the place we have to get. So I canceled it, but we’ll do it in the future,” Trump said Wednesday. He added, “Every time I speak to Vladimir, I have good conversations and then they don’t go anywhere. They just don’t go anywhere.”
US Treasury targets Kremlin’s war funding
The U.S. Treasury Department designated Open Joint Stock Company Rosneft Oil Company and Lukoil OAO pursuant to Executive Order 14024 for operating or having operated in the energy sector of the Russian Federation economy.
Oil is one of Russia’s largest sources of revenue; Rosneft and Lukoil together export 3.1 million barrels of oil per day, with Rosneft alone accounting for nearly half of all Russian oil production and roughly 10 percent of total federal revenue, according to analyst Janis Kluge of the German Institute for International and Security Affairs.
Secretary of the Treasury Scott Bessent framed the action as a direct response to Moscow’s continued aggression. “Now is the time to stop the killing and for an immediate ceasefire,” said Secretary of the Treasury Scott Bessent. “Given President Putin’s refusal to end this senseless war, Treasury is sanctioning Russia’s two largest oil companies that fund the Kremlin’s war machine. Treasury is prepared to take further action if necessary to support President Trump’s effort to end yet another war. We encourage our allies to join us in and adhere to these sanctions.”
The sanctions mandate that all property and interests in property of the designated companies and entities owned 50 percent or more by them that are in the United States or in the possession of U.S. persons are blocked. The Treasury also warned foreign financial institutions that conducting or facilitating significant transactions with the sanctioned entities risks exposure to secondary sanctions. The move has already caused oil prices to rise sharply as global traders express concern over a squeeze on supply, with Indian refiners reportedly moving to slash imports of Russian oil.
Ukraine and EU welcomes US sanctions
The announcement was swiftly welcomed by Kyiv and its European allies. Ukrainian President Volodymyr Zelensky said he had been waiting for the sanctions. Speaking before a European Union summit in Brussels, he stated, “God bless, it will work. We have to pressure Putin to stop this war.” The Ukrainian leader had also used his address to urge EU members to provide Ukraine with long-range weaponry.
Adding to the pressure on Moscow, the 27-nation European Union agreed to adopt its 19th sanctions package targeting the energy sector. These measures introduce a phased ban on imports of Russian liquefied natural gas, the blacklisting of ships in Moscow’s “shadow fleet,” and a ban on transactions with Rosneft and Gazprom Neft.
The new U.S. sanctions against Russia’s oil giants are a clear signal that prolonging the war and spreading terror come at a cost. And this is a fair and absolutely deserved step. It is precisely pressure on Russia that will be effective for achieving peace, and sanctions are one…
— Volodymyr Zelenskyy / Володимир Зеленський (@ZelenskyyUa) October 23, 2025
Russia’s Response
In Moscow, Russian officials attacked the new measures while insisting they would not alter the Kremlin’s position. Russian President Vladimir Putin called the sanctions an “unfriendly act” but brushed off the likely impact.
“They are serious in nature and will have certain consequences, but they will not have a significant impact on the health of our economy,” he said. Putin also warned that sanctions on Russian oil could lead to “a sharp increase” in gas prices across the world, adding: “If you take into account the domestic political calendar in the United States, it is clear how sensitive some processes would be. Those advising the current administration to adopt such measures should ask themselves whom they are really serving.”
Russian Foreign Ministry spokeswoman Maria Zakharova called the U.S. sanctions “entirely counterproductive,” even as she insisted Moscow has developed “strong immunity” to Western restrictions.
A more direct criticism came from hawkish former President Dmitry Medvedev, now deputy chairman of Russia’s Security Council, who wrote in a social media post, “The USA is our adversary, and their loquacious ‘peacemaker’” — meaning Trump — “has now fully taken up the path of war with Russia.”