The Biden administration delivered a parting blow to Russia’s economy Friday, targeting two of its largest oil companies and 183 oil tankers in what a senior official called the “most significant sanctions yet against the Russian energy sector, the largest source of revenue for the Kremlin’s war machine.”
The sweeping new sanctions also include measures against a long list of other entities involved in virtually all sectors of Russia’s energy business and what officials described as a “narrowing” of the U.S. Treasury Department license that has allowed Russia to be paid in dollars for its energy exports.
The sanctions announcement followed the release in recent weeks of billions more dollars worth of U.S. military assistance for Kyiv as President Joe Biden seeks to solidify his legacy in defense of Ukraine and lay the groundwork for continued pressure on Moscow by President-elect Donald Trump.
“We’re in no position to speak for the next team,” said one of three senior administration officials who briefed reporters on the new sanctions. “It’s entirely up to them to determine whether, when and on what terms they might lift any sanctions we put in place.” The officials spoke on the condition of anonymity under rules set by the White House.
But the officials noted that a number of Republican lawmakers have urged Biden to take stronger economic action against Russia and that the sanctions are authorized under laws that give Congress the power to object to any move to lift them.
Asked if the Trump team had been consulted about the measures in advance, National Security Council spokesman John Kirby declined Friday to “speak for the incoming team.” But, he noted, “we have at every step and on every major issue been keeping the transition team informed of our decisions, what we’re doing and why we’re doing it.”
Trump has called for a quick settlement of the war in Ukraine, saying Thursday at a news briefing at his Palm Beach, Florida, residence that Russian “President [Vladimir] Putin wants to talk” and “we are setting it up.” Other officials in his orbit, including Michael Waltz, his choice for national security adviser, have pressed for stepped-up sanctions if necessary to put additional pressure on Putin to accede to an eventual peace deal favorable to Kyiv. The new measures arguably put Trump in a better place to force negotiations by arguing that his hands are tied by sanctions already in place.
“The next president must change course,” Waltz argued in an early-November, pre-election article in the Economist. “America can use economic leverage. … If [Putin] refuses to talk, Washington can, as Mr. Trump argued, provide more weapons to Ukraine with fewer restrictions on their use. Faced with this pressure, Mr. Putin will probably take the opportunity to wind the conflict down.”
Kremlin spokesman Dmitry Peskov, speaking before the widely anticipated sanctions were announced, said Friday that the Biden administration was trying to make things difficult for the incoming Trump team.
“Of course, we are aware that the administration will try to leave the most difficult legacy possible in bilateral relations to Trump and his associates,” Peskov said, declining to comment directly on reports of the new measures. “In this context, another package [of sanctions] is certainly possible,” he told reporters.
While Biden and European allies have imposed a flood of sanctions against Moscow since Russia’s February 2022 invasion of Ukraine, many experts considered his reluctance to go after Russian oil the weak link in economic warfare against Putin.
“Biden has been hesitant to go after Russian oil revenues because of fears of rising gasoline prices and inflation,” said Edward Fishman, senior research scholar at Columbia University’s Center on Global Energy Policy. The determination to do so now, after his election loss, “marks a paradigm shift in the U.S. economic pressure campaign,” Fishman said.
A senior administration official attributed the timing to newly eased domestic and global economic factors that provide “more flexibility” for movement. Forecasters expect a surplus of oil on global markets this year due to increased production in the United States, Canada and elsewhere, and inflation has come down significantly in recent months. “So the moment was right to change our strategy,” the official said.
Other actions being taken include new sanctions on nearly 80 entities and individuals involved in production and export of liquefied natural gas as well as in the metals and mining sectors. The sanctions targeted a number of Russian oil executives, Ministry of Energy officials and board members of Rosatom state nuclear energy company.
The Biden administration official noted that the new measures follow the imposition in November of harsh financial sanctions on Russian banks with international connections, and that Russia’s Central Bank has raised interest rates above 20 percent, while inflation there has risen to nearly 10 percent.
“Taken together, we believe our actions are leaving a solid foundation upon which the next administration can build,” said the official, who predicted they would “cost Russia upwards of billions of dollars per month” in revenue it needs to fund its domestic arms production and the cost of buying weapons and components from countries such as Iran and China.
“This new set of sanctions will further force the Kremlin to make hard decisions between sustaining its war economy in the short run and supporting the health of the overall Russian economy,” a second senior administration official said.
The newly announced sanctions include designation by Treasury Department’s Office of Foreign Assets Control of the third- and fourth-largest Russian oil producers and exporters, Gazprom Neft and Surgutneftegas, both of which are involved in exploration, production and overseas sales – along with more than two dozen of their subsidiaries. “What this does is it, for all practical purposes, means that you cannot do business with these energy majors if you are trading with dollars,” the second official said.
In addition, this official said, by placing sanctions on 183 shipping vessels, “a large part of Russia’s ‘shadow fleet’ … they are going to have to find alternative ships to deliver oil to different markets.”
Shares in Gazprom Neft and Surgutneftegas fell sharply on the Moscow Stock Exchange on Friday, following reports of the planned sanctions. Gazprom Neft had fallen 2.53 percent and Surgutneftegas had declined 2.22 percent by late afternoon, according to the exchange website.
Russia’s energy sector has been only partially affected by earlier sanctions, under which the United States and European allies set a maximum price of $60 a barrel at which participating countries could legally purchase Russian oil in a global system based on dollar transactions. But Moscow has continued to find non-Western markets for exports to get around the price cap and by using “shadow” ships under various flags that allegedly use falsified documents and reportedly turn off tracking systems during ship-to-ship transfers at sea.
The United States, Britain and Europe sanctioned more than 150 ships last year. The new sanctions go further than previous measures to target Russian vessels evading the price cap but still target only a minority of the tanker fleet. The Royal United Services Institute, a British defense think tank, estimates that up to 1,000 largely aging vessels are in use, often with shadowy ownership and documentation.
The officials did not specify the new “narrowing” changes in a U.S. Treasury license that has exempted Russian energy products from sanctions as long as the cap was not exceeded, a loophole that many have argued made previous sanctions weaker than they appeared. But an amendment to the license issued Friday by the Treasury Department appeared to indicate that, unless the Trump administration decides to reverse it, the exemptions would expire as of March 12.
The primary current purchasers of Russian oil are China and India, although officials said the new measures do not target any particular buyers and they expect Moscow to continue to find new ways to circumvent sanctions.
“The reality is that … all the countries that are purchasers of Russian oil have clear alternatives in the marketplace today,” the second official said, as increased global supply keeps prices down and the cost of doing business with Russia grows higher.
(c) 2025, The Washington Post · Karen DeYoung