U.S. Treasury Confirms Sanctions on Rosneft and Lukoil Are Eroding Russian Oil Revenues

The U.S. Treasury has confirmed that sanctions imposed on Russian oil giants Rosneft and Lukoil are already reducing Russia’s oil revenues and are expected to have a lasting impact on the volume of oil sold over time. The Treasury’s Office of Foreign Assets Control (OFAC) released an analysis showing that the sanctions are achieving their intended effect of lowering oil prices and diminishing Russia’s capacity to fund its military operations in Ukraine.

The sanctions, announced on October 22, set a November 21 deadline for companies to end business dealings with Rosneft and Lukoil. Entities that fail to comply face potential exclusion from the U.S. dollar-based financial system. OFAC noted that several key grades of Russian crude oil are now being sold at multi-year lows, and nearly a dozen major buyers from India and China have signaled plans to pause purchases for December.

, a level not seen since March 2023. That period marked the beginning of Russia's efforts to bypass the G7-led oil price cap of $60 per barrel by building a "shadow fleet" of tankers. Meanwhile, , highlighting the growing discount for Russian oil compared to global benchmarks.

The sanctions represent one of the most significant actions by the U.S. since the start of the Ukraine conflict in 2022 and are the first direct sanctions imposed by President against Russian entities since he took office. The Treasury’s move is part of broader efforts to isolate Russia economically and pressure Moscow toward a negotiated peace.

Chevron is among the companies evaluating the possibility of acquiring portions of Lukoil’s global assets, following Treasury approval for talks with the Russian firm. . Lukoil’s assets span across Europe, Asia, Africa, and the Middle East, with stakes in key oil fields in Kazakhstan and Iraq. The company has indicated that it is actively seeking buyers for its international holdings.

Despite the tightening of sanctions, enforcement remains a challenge, particularly as major Russian oil consumers in China and India remain key players. However, the recent drop in Russian crude prices and announced pauses in purchases suggest that the policy is beginning to influence market behavior and reduce Russia’s export capacity.

The cumulative effect of these measures is likely to extend beyond immediate revenue declines. As international buyers increasingly avoid Russian oil amid sanctions, the long-term viability of the Russian oil sector faces structural risks. The shift in buyer behavior could further depress prices and reduce the overall volume of Russian oil reaching global markets.