On January 10, 2025, the Biden administration announced a comprehensive package of sanctions targeting the Russian energy sector, marking the most significant measures since the onset of the Ukraine conflict in February 2022. The sanctions aim to undermine Russian oil and gas revenues, which are crucial for funding the war.
U.S. Treasury Secretary Daleep Singh stated that these sanctions specifically affect major Russian companies Gazprom Neft and Surgutneftegas, as well as 183 vessels involved in transporting Russian oil, often referred to as the 'ghost fleet.' The sanctions are designed to disrupt the supply chain and restrict the flow of oil to countries like India and China, which have become primary buyers due to the G7 price cap.
Ukrainian President Volodymyr Zelensky praised the sanctions, asserting that they deliver a significant blow to Moscow's financial capabilities. He emphasized that reduced revenue from oil sales would expedite the restoration of peace in Ukraine.
The sanctions also revoke a previous exemption allowing Russian banks to facilitate certain energy-related payments. Analysts estimate that the impact of these sanctions could cost Russia billions of dollars monthly if effectively enforced.
In a parallel move, the UK government has implemented similar sanctions against the same Russian firms, with officials noting that these companies contribute significantly to the Kremlin's war funds. Gazprom Neft has condemned the sanctions as unjustified and plans to continue its operations.
The sanctions provide a transition period until March 12, 2025, for affected entities to finalize ongoing energy transactions. However, industry sources indicate that these measures will severely disrupt Russian oil exports to its main markets.
This latest round of sanctions follows earlier U.S. actions in November 2024, which targeted banks and other entities linked to Russia's energy trade. The Biden administration has committed over $64 billion in military aid to Ukraine since the conflict began, underscoring its support for Kyiv amid the ongoing hostilities.