To Build Leverage for Peace, Enforce Oil Sanctions on Russia

American and Ukrainian officials spent the weekend in Geneva revising a peace plan that initially tilted heavily in Russia’s favor. The real challenge now is getting the Kremlin to accept terms that Kyiv can live with. Vladimir Putin must be convinced that prolonging the war will bring Russia nothing but mounting pain. Even as diplomatic negotiations proceed, the Trump administration should continue ratcheting up the pressure on Russia, including by stringently enforcing the new oil sanctions that took effect last week.

The Treasury Department blacklisted Rosneft and Lukoil in October as the White House scrapped plans for a U.S.-Russia summit, citing Moscow’s refusal to soften its demands for a peace settlement. The sanctions, which went into effect on November 21, now present a significant risk for any foreign firms caught doing business with the Russian companies. During its final month in office, the Biden administration sanctioned two smaller Russian oil firms, Gazprom Neft and Surgutneftegas. Collectively, the four blacklisted companies accounted for nearly 70 percent of Russian crude exports in the first half of 2025.

The new sanctions have already begun to bite. Many refiners in China, India, and Turkey — Russia’s largest customers — have pulled back from Russian cargoes, at least for now. Meanwhile, discounts on Russian crude have widened. While sanctions won’t end Russian oil flows entirely, they can make exports harder and less lucrative.

Even before these sanctions, Moscow’s federal budget revenue from oil and gas fell by more than 21 percent in the first 10 months of 2025 amid low prices. Moscow currently plans for that sector to fund around one-fifth of next year’s budget. A dramatic drop in revenue could exacerbate Russia’s economic slowdown and sap funds from the Kremlin’s war machine.

Moscow, however, won’t let its main cash cow go down without a fight. Putin quickly vowed that Russia would shrug off the sanctions. Russian officials indicate they are already devising workarounds — just as they did in response to earlier Western restrictions. Meanwhile, U.S. officials are sending mixed messages about their appetite for enforcement.

Some buyers may take discounted Russian oil while claiming to follow the letter of the law. For instance, after initially canceling Russian oil cargos, India’s top refiner quickly resumed purchases, reportedly from non-sanctioned Russian entities. Others may follow suit. But sanctioned Russian exporters will likely seek to hide behind intermediaries.

It’s no coincidence that after Washington sanctioned Gazprom Neft and Surgutneftegas in January, documented exports from those firms declined while Russia’s overall volumes held steady. As the International Energy Agency recently noted, Russia has “demonstrat[ed] its ability to rapidly form new oil shipping companies and move more volumes via its sanctioned fleet.” The obscure newcomers RusExport, MorExport, and NNK exported roughly 1 million barrels per day (bpd) of Russian crude and petroleum products in October. Other little-known firms have also reportedly increased exports.

Timely, continual enforcement will be key if sanctions are to achieve their intended effect. China will likely be the biggest compliance challenge, as it is with U.S. sanctions on Iran. Treasury should therefore quickly set the tone by making an example out of violators and regularly targeting intermediaries involved in evasion. The department should also comprehensively blacklist Russia’s “shadow fleet” of tankers and the entities insuring and reinsuring them. The same goes for the emerging fleet of Chinese tankers used to transport Russian liquefied natural gas (LNG). The U.S. failure to penalize Chinese entities doing business with Russia’s Arctic LNG 2 project sends the wrong message.

Washington can tighten the screws on Russia in other ways, too. In addition to blacklisting all remaining Russian oil exporters, Treasury could target infrastructure that brings the oil to market. The administration could push the European Union to accelerate its phase-out of Russian LNG imports, allowing for sanctions on Russian gas company Novatek and its Yamal LNG project.

Analysts currently expect a looming supply glut to mitigate upward pressure on global oil prices caused by the recent sanctions. But in case things change, Washington should have backup options ready to stabilize the market while still constricting Russia’s access to oil revenue. For example, the administration could take a page from its Iran sanctions playbook by developing an escrow account regime. This would allow purchases of some Russian oil so long as buyers place payments in controlled local accounts usable for limited purposes, releasing the funds only if Russia complies with a negotiated peace settlement.

Furthermore, Washington should do more to squeeze Russia’s financial sector. It could blacklist additional Russian banks and act on its threat to sanction foreign banks connected to SPFS, Russia’s alternative to the international financial messaging service SWIFT. Finally, Washington could label the Central Bank of Russia as a “Specially Designated National” and name Russia as a “primary jurisdiction of money laundering concern” under Section 311 of the USA PATRIOT Act.

After months of threatening Russia with economic punishment, Trump has delivered an initial blow. Now it’s time to follow through and take the fight to the Kremlin’s coffers.

John Hardie is deputy director of the Russia Program at the Foundation for Defense of Democracies (FDD). Max Meizlish is a fellow at FDD’s Center on Economic and Financial Power (CEFP). He formerly served in the U.S. Treasury Department’s Office of Foreign Assets Control. For more analysis from the authors and FDD, please subscribe HERE. Follow the authors on X @JohnH105 and @maxmeizlish. Follow FDD on X @FDD and @FDD_CEFP. FDD is a Washington, DC-based, nonpartisan research institute focused on national security and foreign policy.