US Claims Success In Hurting Russian Oil Prices With Sanctions

The US Treasury claimed success in the department’s latest efforts to undermine Russia’s funding capacity for its war against Ukraine, in an unusual statement showcasing the market impact of measures against oil giants Rosneft PJSC and Lukoil PJSC.

“Demand for Russian oil is plunging, driven by the efficacy of US sanctions,” the Treasury’s office overseeing US sanctions said. Various grades of Russian oil are “trading well below all other international prices,” with several at multi-year lows, the release said.

Nearly a dozen major Indian and Chinese buyers have said they intend to pause their purchases of Russian December deliveries, according to the statement — a memo dated Nov. 17 from the Sanctions Economic Analysis Division in the Treasury’s Office of Foreign Assets Control.

The Treasury is prepared to take further action if necessary to end the war, a spokesperson for the department said in an email.

Lukoil, Russia’s most internationally diversified oil company, has been trying to sell its overseas operations after getting sanctioned last month. The US recently extended a deadline to give companies more time to bid on those assets.

Since the start of President Vladimir Putin’s early-2022 invasion of Ukraine, the US has levied hundreds of sanctions on Russia and Russian individuals and companies.

“If those are properly enforced then I think it would have an impact,” said Angela Stent, a senior fellow at the American Enterprise Institute, said of the sanctions on Rosneft and Lukoil in a Bloomberg Radio interview. “So far, none of the sanctions have been really rigorously enforced. So that’s really what we have to watch for.”