The U.S. has imposed strict sanctions on Russia's largest oil companies, targeting their operations significantly.

The United States of America on Friday, January 10, imposed what appears to be the toughest sanctions against the Russian oil industry. The restrictions affect "Surgutneftegaz" and "Gazprom Neft." Sanctions were also placed on tankers belonging to the Russian shadow fleet and foreign traders selling Russian oil.

Initially, Reuters reported on the new sanctions, citing a purported document from the U.S. Department of the Treasury that was circulated among traders in Europe and Asia. This document has already led to a 3% increase in global oil prices to $80 and a collapse in the shares of Russian oil companies. Later, the U.S. Treasury officially confirmed the information.

According to Reuters, around 180 vessels, dozens of traders, two major oil companies, and several executives from Russian oil companies and the company "Alfabank" are under sanctions. These companies insure the majority of the vessels supplying Russian oil to India, the largest buyer of Moscow's oil.

Sources in the Indian oil refining sector reported that Indian refineries will refrain from transporting Russian oil on sanctioned tankers or on vessels insured by Russian insurers, which are also under sanctions. A transitional period until March 12 will be provided, allowing for the completion of certain energy-related transactions.

Sanctions Will Force Oil Prices Down

The outcome is expected to lead to a decrease in prices: Russia must lower crude oil prices to below $60 to allow the use of Western insurance and tankers in accordance with the price cap set by the West.

Shares of Russian oil companies sharply declined on the Moscow Exchange on Friday in anticipation of the "farewell" sanctions from the Biden administration. Shares of "Surgutneftegaz" fell by 2.3%, "Gazprom Neft" by 2.5%, and "Rosneft" by 2%.

The U.S. Treasury stated that sanctions have been imposed on an unprecedented number of oil tankers, many of which are part of the shadow fleet. Sanctions have also been placed on Russian oil service providers and Russian energy officials.

"The United States is taking radical measures against the primary source of revenue for Russia to finance its brutal and illegal war against Ukraine. This action builds on our focus since the onset of the war on obstructing the Kremlin's energy revenues, including from the G7+ price cap imposed in 2022, and strengthens it. Today's actions increase the risk of sanctions related to Russian oil trade, including transport and financial facilitation to support oil exports from Russia," said U.S. Treasury Secretary Janet L. Yellen.

Other Sanctions Against Russia

The European Union plans to adopt the 16th package of sanctions against Russia on February 24, 2025 – the third anniversary of Russia's war against Ukraine. It will cover sectors of the Russian economy that have not been fully addressed or were only partially included. There will also be new restrictions on propagandists.

In late November 2024, the United Kingdom imposed sanctions on 30 ships from Russia's shadow fleet. Thus, the latest restrictions became the largest package of British measures aimed at reducing the Kremlin's ability to finance its war against Ukraine. In total, the British have restricted the operations of 73 Russian vessels.