Oil Price Jumps As President Trump Announces Sanctions On Two Russian Oil Giants

24th October 2025

On 23 October 2025, the U.S. announced new sanctions targeting Russia's two major oil companies: Rosneft PJSC and Lukoil PJSC, plus many of their subsidiaries.

The rationale given: these firms are major sources of revenue for the Russian state and its war-effort in Ukraine. The U.S. Treasury said, "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."

The sanctions freeze U.S. assets of the targeted companies and ban U.S. persons from engaging in business with them. Secondary sanctions (i.e., sanctioning non-U.S. actors who deal with them) are also in scope.

The move appears tied to efforts to push Russia toward a cease-fire or negotiation in the war in Ukraine.

The Russian side (including Vladimir Putin) called the sanctions “serious” but claimed they would not force a change in policy.

Why this matters
Rosneft and Lukoil together export about 3.1 million barrels per day of crude, which is a large share of Russia’s overseas exports.

Historically, sanctions and other measures (like price-caps or insurance restrictions) have already eroded Russia’s oil export revenues.

Russia reportedly lost €34 billion (14 %) in export revenues in one year due to Western sanctions and a price cap.

Early data suggest that supply of Russian crude is already being impacted by sanctions and shipping/insurance problems.

Because oil markets are global, any risk of supply disruption (especially from a major producer like Russia) tends to push prices up or increase volatility.

How oil prices are affected
Immediately after the announcements: global crude oil prices rose. E.g., Brent crude rose 5.7% on the day of the announcement.

In one report U.S. crude (WTI) climbed to about US$60.10 per barrel as markets reacted to the sanctions and related supply concerns.

Analysts caution that some of the price rise is driven by fear/expectation of supply disruptions rather than confirmed immediate cuts.

The medium-term effect depends on how much Russian exports are actually curtailed, how quickly trading partners adjust, and whether alternative supplies fill the gap.

Key uncertainties and things to watch
Will major Russian buyers such as India and China reduce or stop purchasing Russian oil? There are early signs they may cut back.

How well will enforcement of the sanctions and related policies (shipping/insurance restrictions, price caps) work in practice? Russia has been adapting (shadow fleets, alternate delivery routes).

Whether supply from Russia actually falls significantly or shifts to other buyers at terms disadvantageous to Russia. If supply holds up (just at a discount) then the long-term global price effect may be muted.

Whether other producers (OPEC+, Middle East, US shale) step up production to compensate, dampening price increases.
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What this means going forward
In the short term, expect elevated prices and increased volatility in oil markets, given the market’s sensitivity to supply disruption risks.

In the medium to long term, the effect on global oil prices will depend on concrete outcomes: how much Russian exports fall, how quickly buyers switch, how much new supply comes online.

For Russia the sanctions could further squeeze oil revenues, increasing pressure on its budget and possibly reducing its ability to fund the war - albeit with long lags.

For oil-importing countries they might face higher costs, and may have to reshape their supply chains if Russian oil becomes harder to buy.

For the global energy market this is another factor adding to structural uncertainty (geopolitics, supply constraints, shifting demand) which may support higher prices or at least a floor against large drops.