US sanctions against Russia’s two largest energy companies, the state-owned Rosneft and privately held Lukoil, are perhaps the most significant economic measures imposed by the West since the invasion of Ukraine.
If fully implemented, they have the potential to significantly choke off the flow of fossil fuel revenue that funds Russia’s war machine, but their power lies not in directly denying Russia access to the tankers, ports and refineries that make the oil trade turn, but the US financial system that greases the wheels.
Ever since the invasion, the Russian government has proved masterful at evading sanctions, aided and abetted by allies of economic convenience and an oil industry with decades of experience.
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While the West, principally the EU, has largely turned off the taps and stopped buying Russian oil, China, India and Turkey became the largest consumers, with a shadow fleet of tankers ensuring exports continued to flow.
Data from the Centre for Research into Energy and Clean Air (CREA) shows that while fossil fuel revenues have fallen from more than €1bn a day before the war, they have remained above €600m since the start of 2023, only dipping towards €500m in the last month.
None of that oil has been heading for the US, but these sanctions will directly impact the ability of the Russian companies, and anyone doing business with them, to operate within America’s financial orbit.
According to the order from the US Office for Foreign Asset Control, the sanctions block all assets of the two companies, their subsidiaries and…
