The United States Treasury has announced that its new sanctions on Russian oil giants Rosneft and Lukoil are already reducing Russia’s earnings from crude sales. These sanctions, introduced on October 22, mark one of the most forceful actions taken by the US since Russia launched its full-scale attack on Ukraine in February 2022. They also represent the first direct measures placed on Russian oil companies during the current administration.
Under the new rules, companies worldwide have been given a deadline of November 21 to stop business dealings with Rosneft and Lukoil. Firms that fail to comply could lose access to the US dollar-based financial system, which is widely used for global oil payments and banking. The Treasury explains that the purpose of the sanctions is to limit the flow of money Russia earns from oil, a sector that has long provided a major share of the country’s national revenue.
Market data shows immediate pressure on Russian crude
Soon after the sanctions were announced, the Treasury’s Office of Foreign Assets Control (OFAC) carried out an early review of their impact. According to OFAC’s analysis, several important grades of Russian crude began selling at sharply reduced prices in global markets.
One of the clearest price drops was seen in Urals crude shipped from the Black Sea port of Novorossiysk. LSEG trading data recorded Urals at $45.35 a barrel on November 12, which was the lowest level since March 2023. At that time last year, Russia had started using a “shadow fleet” of older and less regulated tankers to move oil outside the standard tracking systems. This shift came after the G7 group of nations set a price cap of $60 per barrel in December 2023.
During the same mid-November period, Brent crude—the global benchmark—was trading above $62 per barrel, creating a wide gap between Brent and Russian crude. This price difference shows that Russia has been forced to sell its oil at steep discounts as the sanctions take effect.
A temporary suspension of oil loadings at Novorossiysk added further disruption. Shipments were halted due to a drone and missile strike linked to the ongoing conflict. Although loadings later resumed, the interruption increased pressure on Russia’s oil export system and reduced short-term supply.
Major Indian and Chinese buyers pause upcoming purchases
Major buyers have also played a role in reducing Russia’s oil revenue. OFAC reported that nearly a dozen refiners and trading companies in India and China plan to pause Russian crude purchases for December deliveries. Since these two countries have been Russia’s largest oil customers since 2022, their decision immediately reduced demand.
Market reports noted that Russian oil discounts widened as Indian and Chinese buyers cut back. With fewer contracts and reduced interest in quick deliveries, Russia was pushed to offer lower prices to maintain sales. This contributed to the drop in revenue after the sanctions were announced.
LSEG data showed increased price volatility following the sanctions, with traders citing uncertainty about supply, shipping, and insurance for Russia-linked cargoes. These issues led to reduced trading activity and lower prices for Russian shipments during November.
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Treasury says sanctions are achieving their intended impact
A Treasury spokesperson stated that the sanctions are “having their intended effect” by reducing the price of Russian oil and decreasing the volume Russia is able to sell. The spokesperson said the department aims to reduce the financial resources that support Russia’s actions in Ukraine and that the US is prepared to take additional measures if necessary.
These statements reflect the Treasury’s assessment based on market indicators collected from the announcement of sanctions on October 22 through mid-November. The findings point to falling prices for Russian crude, reduced buying interest from major customers, and widening gaps between Russian oil prices and global benchmarks.
According to the Treasury, these developments show that the sanctions are restricting Russia’s oil earnings in the weeks following their introduction.