Top buyers spooked and Lukoil in crisis: Russia feels the heat from Washington’s latest oil sanctions
On October 22, the U.S. Treasury Department announced new sanctions against Russia’s largest oil exporters, Lukoil and Rosneft. Just over three weeks later, it’s clear that the restrictions are affecting not only those two companies but the broader Russian oil industry. Prices for Russian crude are falling, major buyer countries are cutting imports, and the fate of sanctioned foreign assets remains uncertain, putting Lukoil’s international operations at risk. Meduza examines the impact of Trump’s sanctions so far.
One of the key indicators of how effective sanctions on Russia’s commodity exports are is the discount — the price gap between Russian Urals crude and the benchmark Brent blend. At its peak, this discount has reached dozens of dollars per barrel — for instance, right after the E.U. imposed its Russian oil embargo. It widened again at the end of 2024 after the Biden administration targeted Gazprom Neft, Surgutneftegaz, and a large portion of Russia’s “shadow” tanker fleet. Still, each time, the market recovered within weeks. By mid-2025, the discount had narrowed to just $2.25. But by late October, likely due to fears of new U.S. restrictions, it climbed back to around $11–12. It then rose sharply after the sanctions on Lukoil and Rosneft, reaching $19.40 as of November 10, according to an industry source cited by Kommersant.
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So far, the drop in Russian crude prices hasn’t yet shown up in the federal budget. While Russia’s oil and gas revenues fell by almost 27 percent in October (from 1.2 trillion rubles, or $15.9 billion, to 888.6 billion, or $11 billion), that decline was mainly due to the stronger ruble. The average price of a barrel of Urals crude in ruble terms last month was one-third lower than a year ago. The discount to Brent, meanwhile, remained stable, Raiffeisenbank analysts noted. They expect the sanctions’ impact on the budget to become visible in November–December. That aligns with the government’s own forecast: according to the Finance Ministry, this month alone, the shortfall in oil and gas revenues will reach 48 billion rubles ($594.8 million).
China and India pull back as a billion barrels sit at sea
A central question following the sanctions on Lukoil and Rosneft has been how Russia’s largest external oil buyers — China and India — would respond. In the first days after the U.S. Treasury’s announcement, importers were unsettled by the threat of secondary sanctions. Several weeks later, it remains too early to say that this concern has fully subsided or that buyers have found reliable ways to bypass the restrictions.
In early November, Bloomberg, citing traders, reported that in China, both state-owned giants like Sinopec and PetroChina, as well as smaller private refiners, were scaling back purchases of Russian oil. According to consulting firm Rystad Energy AS, total imports from Russia had fallen by nearly half, to around 400,000 barrels per day at that time.
The situation may have worsened in the days that followed. On November 11, Reuters, citing its own sources, reported that Yanchang Petroleum — the operator of one of China’s largest refineries — had opted out of tenders for Russian crude shipments scheduled from December through mid-February.
Industry sources told Bloomberg that traders were particularly unsettled by the lack of clear guidance on Russian crude imports after Donald Trump’s meeting with Chinese President Xi Jinping. The two leaders made progress on some trade issues, but there was no sign that any agreement was reached that would lead to China returning to its previous level of Russian oil imports.
Indian buyers have shown similar caution. As Bloomberg reported, as of November 11, five major Indian refineries — together accounting for two-thirds of the country’s Russian crude imports in 2025 — had not placed their usual December orders, typically submitted by the 10th of the month. Only two companies, Indian Oil and Nayara Energy, were proceeding with Russian purchases. Indian Oil secured enough crude from non-sanctioned suppliers, while Nayara, which counts Rosneft among its shareholders, remains fully dependent on Russian imports.
The market continues to watch Washington closely. Trump recently said the U.S. and India are close to a trade deal, and according to Bloomberg sources, one element could involve New Delhi committing to buy more American oil. Meanwhile, Indian companies are already diversifying supply sources: in early November, they secured new agreements with Middle Eastern producers, including Saudi Aramco and Abu Dhabi National Oil Co.
Turkey has also reduced its imports of Russian crude. According to Reuters, Turkish refineries are increasingly turning to alternative suppliers, including Iraq and Kazakhstan.
The tension has created an unusual situation: the world’s oceans are now crowded with a record number of loaded tankers carrying crude from sanctioned countries (though not exclusively). Bloomberg estimates that nearly one billion barrels of oil are currently aboard these vessels — a nearly 40 percent increase since late August. The main holders of these volumes are Russia, Iran, and Venezuela, with Russian crude accounting for the largest share.
The buildup isn’t solely the result of sanctions. Some Russian crude was redirected abroad to offset declines in domestic refining caused by Ukrainian drone attacks, while overall maritime exports rose in line with OPEC+ production targets. Other producers, such as Saudi Arabia and the U.S., have also boosted seaborne shipments. As a result, total ocean shipments in October reached their highest level since July 2024.
It’s still too early to speak of a systemic crisis in Russia’s oil sector, despite the mounting pressures. China and India are unlikely to find large-scale alternatives to Russian crude, and removing Russian oil from global markets could trigger a sharp price spike — something Washington would also prefer to avoid. The most likely scenario is a reduction or stabilization of Russia’s share in global exports, which is unlikely to critically undermine the Kremlin’s ability to sustain its war in Ukraine.
However, rebuilding new supply chains to bypass the restrictions will likely take longer than after previous sanction rounds. Experts interviewed by Kommersant estimate it could take several months, with short-term consequences for the broader Russian economy.
Lukoil at risk of takeover
Trump’s sanctions have been particularly painful for Russia’s largest private company. Lukoil is far more export-dependent than Rosneft: in 2024, almost all of its oil sales went to foreign markets. The company also owns extensive assets abroad — from Kazakhstan, Azerbaijan, and Georgia to Western Europe and Africa — valued at no less than 14 billion euros ($16.3 billion), excluding minority stakes not covered by sanctions. To avoid losing these assets, Lukoil urgently needs a buyer.
At first, one seemed to appear quickly. In late October, the company announced plans to sell its foreign business to the Swiss trading firm Gunvor — one of the world’s largest oil traders, long known for its ties to Russia. Until 2014, Gunvor was co-owned by Gennady Timchenko, a businessman close to Vladimir Putin. After Russia’s annexation of Crimea, Timchenko sold his stake to his partner, Torbjörn Törnqvist.
But Gunvor’s image with U.S. authorities hasn’t improved over the past decade. A week after Lukoil announced the deal, the U.S. Treasury branded the Swiss trader a “Kremlin puppet” and signaled it would block the transaction. Gunvor withdrew from the purchase the following day.
On November 10, Lukoil declared force majeure at its key foreign asset — the West Qurna-2 oil field in Iraq, one of the world’s largest deposits, with daily output of about 480,000 barrels. According to Reuters, Iraqi authorities have frozen all payments to Lukoil, and the state oil company SOMO has canceled shipments of crude already produced there.
Lukoil’s assets in other countries are also under threat. The Bulgarian government is considering nationalizing the Lukoil-owned Burgas refinery, the largest in Southeastern Europe, with a capacity of 195,000 barrels per day. Romania’s government has not ruled out a similar move targeting Lukoil’s Petrotel refinery, which processes about 50,000 barrels per day. Meanwhile, Moldovan authorities are exploring a potential buyout of Lukoil’s main fuel storage facility in the country.
All these countries (and several others) have asked Washington to extend the deadline for winding down transactions with sanctioned companies — the so-called “X-day” falls on November 21, exactly one month after the sanctions took effect. If the White House doesn’t issue specific licenses allowing continued dealings with Lukoil, the risk of nationalization of its global assets will rise sharply.
Losing such a large share of its business poses an existential threat to the company. According to a Financial Times source who previously worked at Rosneft, CEO Igor Sechin “keeps going upstairs every month with a new proposal [for a takeover], but so far without success.” Experts also told the paper that Lukoil’s current vulnerability could open a window for a state takeover by Rosneft. Tatiana Mitrova of Columbia University’s Center on Global Energy Policy suggested that “if the sanctions are strictly enforced and the [Russian] government has to step in to rescue Lukoil, it may well consider folding the company into Rosneft.”