ANALYSIS
US severely sanctions Rosneft and Lukoil, major Russian oil companies, to pressure Putin for a ceasefire with Ukraine
The Department of the Treasury is blocking assets and banning transactions with the designated companies, extending sanctions to the heart of Russia's energy sector.
Russian President Vladimir Putin
On Wednesday, the U.S. Department of the Treasury announced a new package of sanctions targeting the heart of Russia's energy sector, as it pointed to the Kremlin's lack of commitment to a peace process to end the war in Ukraine. The measures target the country's two main oil companies, Rosneft Oil Company (Rosneft) and Lukoil OAO (Lukoil), as well as dozens of their subsidiaries, blocking their assets under U.S. jurisdiction and restricting any transactions with U.S. citizens or companies.
Treasury Secretary Scott Bessent stated that the aim of the sanctions is to "stop the killing" and force an immediate ceasefire. "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," Bessent said in a statement, while urging Washington's allies to join the measures and support President Donald Trump's efforts to end the conflict.
Companies and subsidiaries sanctioned
The Treasury specified that any entity 50% or more controlled by the sanctioned companies is automatically subject to the same restrictions, even if it is not individually named.
Legal scope and consequences
The notice states that all assets and interests in assets of the designated entities located in the United States or under the control of U.S. persons are blocked and must be reported to the Office of Foreign Assets Control (OFAC). Any transactions with these companies are prohibited unless a specific license is issued by such office.
Foreign financial institutions that facilitate significant transactions with the sanctioned companies could also face secondary sanctions or restrictions in the U.S. banking system. OFAC recalled that failure to comply with these provisions may result in civil or criminal penalties, applicable even under strict liability.
Additionally, individuals on the Specially Designated Nationals List (SDN) may be subject to further export restrictions imposed by the Department of Commerce. The Treasury stressed that it maintains a legal process to review and, if appropriate, remove entities from the list in accordance with the law.
"Treasury is prepared to take further action if necessary to support President Trump’s effort to end yet another war," the statement concluded.
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