Wall Street analysts are warning of severe economic fallout for Russia after President Donald Trump imposed new sanctions on Rosneft and Lukoil, the country’s biggest oil producers.
The decision, made after the Kremlin rejected Washington’s call for a cease-fire and peace talks, brings the U.S. and Europe into full alignment on punishing Moscow for its ongoing war in Ukraine.
The announcement of the sanctions triggered an immediate market response, with Cryptopolitan reporting that Brent crude surged by roughly 5% as analysts started to predict global supply disruptions.
According to the Wall Street Journal, Trump’s sanctions strike directly at the heart of Russia’s economy, its energy exports, which account for nearly a third of its federal revenue.
Helima Croft, head of global commodity strategy at RBC Capital Markets, said the decision is “the most material step by the U.S. to shutter the Russian war ATM. Refiners wanting to maintain access to American financial markets will forgo Russian barrels.”
U.S. and Europe coordinate sanctions to squeeze Moscow
The European Union followed Washington’s lead by approving new sanctions phasing out purchases of Russian liquefied natural gas, worth about €7 billion (roughly $8.1 billion) this year.
The EU also blacklisted 21 Chinese and other foreign companies accused of helping Russia evade restrictions, alongside 117 new shadow vessels, ships secretly carrying Russian crude, bringing the total banned to 558, according to the Commission’s press release.
WSJ claims a European delegation was in Washington when the U.S. Treasury announced its decision, and officials allegedly said that if both sides enforce penalties on companies and banks moving Russian oil, the results could be “multiplicative.”
China’s Foreign Ministry pushed back, calling the EU’s actions “illegal” and warning that “most countries will continue to trade with Moscow.” Beijing demanded Brussels stop “harming China’s interests.” Trump, however, has repeatedly urged Europe to go after Beijing’s financial support for Russia, arguing that it props up Moscow’s war economy.
Russia faces economic strain as revenues collapse
Inside Russia, the tone was defiant but nervous. Maria Zakharova, spokesperson for the Foreign Ministry, said the sanctions “won’t pose problems” and that the country had built “a strong immunity to Western restrictions.” Dmitry Medvedev, deputy chairman of the Security Council, wrote online that the U.S. had “fully embarked on the warpath against Russia.” But the data tells another story.
After more than three years of defying Western sanctions, Russia’s economy is now slowing sharply. Growth that hit 4.3% last year is expected to drop to 0.6% in 2025 and 1% in 2026, the International Monetary Fund projects. Inflation remains stubborn near 8%, while a labor shortage worsens as men either flee or fight. The Central Bank has trimmed interest rates several times, but they remain painfully high at 17%.
Falling oil prices and shrinking exports have led to a widening budget deficit. The Kremlin is raiding its National Welfare Fund, issuing more domestic bonds, and hiking taxes to stay afloat. The Opora small business association recently called the new tax hikes “a shock for all small businesses.” Factories producing everything from tractors to furniture are scaling back.
Even so, Russia has become skilled at dodging penalties, using intermediaries, selling oil to India and China, and building a “shadow fleet” to move crude undetected. Rachel Ziemba, senior fellow at the Center for a New American Security, said this system “will blunt some effects” of the sanctions, though not without cost.
Still, Western leaders believe this coordinated push will cut deeper than before. Volodymyr Zelensky, speaking in Brussels, said, “Russia doesn’t show that they want to stop this war. They attack us. Thanks for this unity, thanks for this support.”
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