Geopolitical Risks and Green Energy Policy Alignment: Assessing the Financial Impact of U.S. Sanctions on Oil and Gas Firms

The intersection of geopolitical strategy and green energy policy has become a critical focal point for investors, particularly as U.S. sanctions on international oil and gas firms reshape the financial landscape of net-zero initiatives. Recent actions targeting Russian energy giants like Gazprom Neft and Surgutneftegas, as well as Western firms such as Shell, reveal a complex interplay between sanctions, corporate sustainability goals, and global energy transitions. This analysis examines the financial toll of these measures on net-zero projects, offering insights for investors navigating this volatile terrain.

Sanctions and Revenue Erosion: A Double-Edged Sword

The U.S. Treasury's 2025 sanctions on Russian energy firms, including Gazprom Neft and Surgutneftegas, have directly curtailed their ability to access global markets and secure financing for long-term projects. By blocking transactions with these entities and restricting U.S. petroleum services, the Biden administration aimed to reduce Russia's oil and gas revenues by 24% in 2023 compared to the prior year, according to a U.S. Treasury press release. Gazprom, for instance, faced estimated revenue losses of $6.4 billion in 2023 due to reduced European exports and limited Asian market alternatives, according to an Atlantic Council analysis. These sanctions also disrupted the shadow fleet-over 180 vessels facilitating Russian oil exports-forcing companies to absorb higher shipping and insurance costs, as noted in a Columbia Q&A.

For net-zero initiatives, the consequences are twofold. First, the financial strain limits investment in green technologies. Gazprom Neft's 2024 net profit of $15 billion, while a rebound from 2023 losses, was largely driven by gas production and the acquisition of Shell's Sakhalin-2 stake, not sustainability projects, according to the Carnegie Endowment. Second, the winding down of General License 8L-a key channel for USD-denominated transactions-has further constrained access to international capital, complicating long-term planning for decarbonization, as explained in an Eversheds briefing.

Western Firms: Sanctions, Divestment, and Strategic Shifts

U.S. sanctions have also reshaped the strategies of Western energy giants. Shell, for example, has scaled back its renewables investments amid financial pressures. In 2024, its Q4 earnings dropped to $1.20 per American Depository Share (ADS), down from $2.22 in 2023, with revenue falling to $66.8 billion, as a CarbonCredits analysis shows. The company's Integrated Gas segment saw a 14.3% decline in LNG sales, directly impacting funding for biofuels and hydrogen projects, according to that CarbonCredits analysis. Shell's revised capital expenditure plans now allocate $2–3 billion annually to renewables, a reduction from its initial $10–15 billion target for 2023–2025, as reported in a Greentech Lead report.

The financial calculus is further complicated by geopolitical risks. Shell's withdrawal from the Science Based Targets initiative (SBTi) in 2025-over its proposed ban on new oil and gas projects-reflects growing tensions between climate accountability and corporate survival, as OilPrice reported. For investors, this signals a shift toward short-term profitability over long-term sustainability, potentially undermining global net-zero timelines.

Quantifying the Impact on Green Energy Transitions

The financial ripple effects of sanctions extend beyond individual firms. In 2025, over $14 billion in U.S. clean energy projects were delayed or canceled due to policy uncertainty and sanctions-related disruptions, according to a NEN Power analysis. For example, the Trump administration's cancellation of $7.6 billion in clean energy grants-including California's hydrogen hub and Washington's methane reduction initiatives-jeopardized 200,000 jobs and $10 billion in private investment, PBS NewsHour reported. While these cuts were politically motivated, they highlight how geopolitical shifts can destabilize green energy transitions.

Meanwhile, Russian firms have adapted by redirecting resources to non-sanctioned projects. Gazprom's 2024 corporate overhaul, including the consolidation of subsidiaries and reduced managerial ranks, underscores a pivot toward maintaining core operations over sustainability, according to the Moscow Times report. However, analysts estimate that Russia's oil exports could still decline by 0.5–1 million barrels per day in the short term, with long-term impacts hinging on enforcement consistency, as noted in a State Department release.

Strategic Implications for Investors

For investors, the key takeaway is the duality of sanctions: while they achieve geopolitical objectives, they also create financial and operational risks for firms pursuing net-zero goals. The following strategies are recommended:
1. Diversify Exposure: Prioritize firms with hybrid portfolios balancing fossil fuels and renewables to mitigate sanctions-related volatility.
2. Monitor Policy Shifts: Track legislative changes, such as the Inflation Reduction Act's tax credits, which can either bolster or undermine green investments.
3. Assess Corporate Resilience: Evaluate how firms adapt to sanctions, including their ability to secure alternative financing and navigate geopolitical risks.

Conclusion

The financial impact of U.S. sanctions on oil and gas firms underscores the fragility of aligning geopolitical goals with green energy transitions. While these measures have curtailed Russian revenues and forced Western firms to recalibrate their strategies, they also risk slowing progress toward net-zero targets. Investors must navigate this landscape with a nuanced understanding of both political and environmental dynamics, recognizing that the path to sustainability is as much about resilience as it is about innovation.