Even before the U.S. sanctioned Russia’s two largest oil companies, Rosneft and Lukoil, President Donald Trump was insisting that the Russian "economy is going to collapse.” The Oct. 22 announcement of the sanctions, which are intended to block all U.S.-linked property and transactions of these Russian energy giants and their subsidiaries, led quite a few commentators to make similar predictions. “Russia’s economy is beginning to buckle,” Melissa Lawford, U.S. economics writer at the UK’s The Telegraph, stated in her Oct. 26 piece, which assessed the impact of the U.S. sanctions on Russian oil exports, which Kyiv believes could cost Moscow $50 billion annually. “Western sanctions have frozen hundreds of billions of dollars in assets and crippled imports of technology and machinery,” Daily Beast reported in an Oct. 25 article entitled “Putin’s System Begins to Collapse as Russians Finally Dare to Confront Him.” “Could U.S. Sanctions Finally Cripple Russia’s War Economy?” Oilprice asked in the headline that it put on RFE/RL’s piece on the sanctions which it republished on Oct. 23.¹ Al Jazeera asked a similar question, wondering “Will Trump’s Sanctions Truly Cripple Russia’s Economy?” 

Indeed, will they? After all, when the Oct. 22 sanctions come into force on Nov. 21, three-quarters of Russian oil exports will be coming from companies under new U.S. sanctions, according to an Oct. 23 article in Kommersant by Olga Semenov and Olga Mordyushenko. Moreover, as Georgi Kantchev and Laurence Norman write in the Wall Street Journal: “The new sanctions bring Washington and Europe into alignment in their pressure on Moscow for the first time since the start of the Trump administration.” That might be the case but not all analysts whose opinions we have reviewed while researching this piece believe the sanctions will cripple Russia’s economy. Moreover, quite a few believe there will be no crippling effect on that economy, with some pointing to Russia’s previous successful experience in dodging energy and other sanctions. Thus, quite a few are skeptical that the latest sanctions will make Vladimir Putin moderate his aims vis-à-vis Ukraine.

Below we present a more detailed overview of what the U.S. government has declared as the aims behind its latest sanctions, what analysts think is achievable, as well as the context in which these punitive measures are being pursued(entries in each section are arranged in chronological order wherever possible).

Key points from the Oct. 22 announcement of U.S. sanctions on Rosneft and Lukoil

On Oct. 22, the U.S. Treasury announced new sanctions on Russia’s two largest oil companies, Rosneft and Lukoil, as well as numerous subsidiaries, intensifying pressure on Russia’s energy sector which is funding its continued war in Ukraine.

• The designations block all U.S.-linked property and transactions of Rosneft, Lukoil and their subsidiaries, aiming to cut off sources of funding for the Russian war machine.
• Foreign financial institutions and individuals risk secondary sanctions if they conduct significant business with the designated Russian companies.
• The Trump administration stressed it will maintain and escalate sanctions to support a peace process, urging allies to enforce these measures. “Now is the time to stop the killing and for an immediate ceasefire,” said Secretary of the Treasury Scott Bessent as the sanctions were announced.

Intended impact of sanctions as outline by the U.S. government in its Oct. 22 announcement of sanctions on Rosneft and Lukoil:

• Putting pressure on Russia to end the war: "The United States will continue to advocate for a peaceful resolution to the war, and a permanent peace depends entirely on Russia’s willingness to negotiate in good faith."
• Degrading Russia’s war machine and economy: “Today’s actions increase pressure on Russia’s energy sector and degrade the Kremlin’s ability to raise revenue for its war machine and support its weakened economy."
• Stopping funding for the war: “Given President Putin’s refusal to end this senseless war, Treasury is sanctioning Russia’s two largest oil companies that fund the Kremlin’s war machine."
• Encouraging positive change in behavior: “The ultimate goal of sanctions is not to punish, but to bring about a positive change in behavior."

Impact of the Oct. 22 sanctions as expected by analysts

Significant impact on Putin’s pursuit of Russia’s war aims unlikely:²

• Thomas Graham, fellow at the Council on Foreign Relations stated: “If the White House thinks this is going to lead to radical change in the Kremlin’s conduct or Putin’s policy, they’re deluding themselves… Sanctions work slowly, and the Kremlin has been very good at circumventing these kinds of sanctions,” he said. (Bloomberg/The Guardian, 10.22.25)
• Jennifer Kavanaugh, a senior fellow at Defense Priorities, said she doubted the sanctions would have a major effect on the Ukraine war. “For Putin, this war is existential,” she said. “He has shown that he is willing to bear significant costs to achieve his objectives, in terms of lost Russian lives and economic and military expenses. This latest round of sanctions will not change that calculus.” (RFE/RL, 10.23.25)
• Catherne Lucey et al. of Bloomberg wrote: “It’s unclear whether the latest restrictions can seriously impact Putin’s calculus on the war. The Biden administration imposed wave after wave of sanctions against Russia after its invasion in 2022, damaging the economy but never deterring Putin from pressing ahead. Because the focus is on the oil companies themselves—not secondary sanctions that would penalize third-parties that do business with them—many of those barrels are still likely to find their way to market, albeit at a higher cost.” (Bloomberg, 10.22.25)
• The Economist wrote: “Will Mr. Trump’s sanctions force Mr. Putin into submission?... It is unclear… whether America’s change of heart will be enough to deter buyers from ditching Russian supplies, which they buy at a discount… Even if they are not quite the all-out strike they first appear, Mr. Trump’s measures will cause serious friction… In the short term, therefore, the friction will probably cause Russia’s export volumes to drop. For a more enduring impact, Mr. Trump would either have to offer a quid pro quo to Mr. Modi, or show that his measures have teeth by imposing sanctions on a clutch of Indian or Chinese refiners and banks.” (The Economist, 10.23.25)
• Foreign Policy’s Keith Johnson concluded the sanctions pressure is immense but not necessarily decisive: “It [Russia] has suffered at least 1 million casualties for little territorial gain… What level of economic pressure on a subset of Russian state revenues will be enough to revolutionize Putin’s worldview?” (Foreign Policy, 10.23.25)
• Former U.S. Ambassador John Herbst said: The sanctions "will certainly hurt the Russian economy, which is already stumbling… But I think it's naive to expect this step alone [will] push Putin to actually make peace and good faith." (BBC, 10.23.25)
• “Observers said the new measures are unlikely to significantly shift Putin’s war aims. Successive rounds of U.S. sanctions since 2022 have strained Russia’s economy but haven’t halted the war.” (Wall Street Journal, 10.23.25)
• Alexandra Prokopenko, a fellow at the Carnegie Russia Eurasia Center, said not to "bet on Putin moving to make a quick deal, arguing his ‘goals stretch far beyond economic logic’.” (Financial Times, 10.24.25.)
• “Complicating the negotiating picture is the fact that, for Russia, territory is just part of its war aims, said Andrew Peek, who served as senior director for European and Russian affairs at the National Security Council before leaving the position in May. According to Peek, Russia’s core issues include a desire for Ukraine’s territory; concern over Ukraine’s security alliances, such as Kyiv’s interest in joining NATO and its insistence on securing a Western security guarantee; and the future composition of Ukraine’s military. Russia previously insisted that Ukraine should reduce its army to just 85,000 servicemembers and limit its missiles to ones with a range of 25 miles, among other demands.” (Foreign Policy, 10.28.25.)
• Sergey Vakulenko, a former Russian oil executive and senior fellow at Carnegie Russia Eurasia Center, wrote: “History shows that hitting Lukoil and Rosneft is unlikely to force Russian President Vladimir Putin to change course when it comes to the war in Ukraine, and will only have a small, temporary effect on Russian oil exports. For Putin, the war is not a pragmatic struggle that only makes sense while the costs are not too great. It is a point of principle, and the symbolic capital he hopes to earn is far more important to him than any resources expended.” (Carnegie Politika, 10.28.25.)
• Neither the carrots nor sticks immediately available to Trump are likely to solve the war, according to Max Bergmann, director of the Europe, Russia, and Eurasia Program at the Center for Strategic and International Studies. “There’s absolutely no quick fix… This is about Vladimir Putin’s place in history,” Bergmann said. “He wants to be Vladimir the Great. And how is he going to be Vladimir the Great if the war ends tomorrow?” (Foreign Policy, 10.28.25)
• Laura Cooper, who oversaw Russia and Ukraine policy at the U.S. Defense Department under the Biden administration, said: “You have to understand how much Putin has invested in this war, and how much he’s invested in convincing his population that this war must be successful.” (Foreign Policy, 10.28.25)
• Foreign Policy’s Sam Skove wrote that even after “sanctions on Russia’s top oil producers, Rosneft and Lukoil… the Kremlin… isn’t budging,” with Putin insisting Moscow would not change its negotiating stance and demanding “broader concessions as a precondition for ending the war.” (Foreign Policy, 10.28.25)
• Clayton Seigle of the Center for Strategic & International Studies (CSIS) wrote, “These new sanctions probably won’t be enough to move Moscow toward compromise, as the Kremlin knows it only needs to outlast an initial commercial and marketing challenge before persistent oil trading patterns resume.” (CSIS, 10.31.25.)

Significant impact on the Russian economy likely:

• The Wall Street Journal’s Georgi Kantchev and Laurence Norman wrote: “The new sanctions bring Washington and Europe into alignment in their pressure on Moscow for the first time since the start of the Trump administration. For Russia, any decline in its oil exports would directly dent the Kremlin’s war chest since energy sales account for as much as a third of the country’s budget revenue. The sanctions are also expected to introduce more friction in logistics and payments, shrink profit margins, and force Russian producers to offer further discounts on the global market.” (The Wall Street Journal, 10.23.25)³
• “Rosneft and Lukoil account for around two-thirds of the 4.4 million barrels of crude Russia exports each day, according to David Fyfe, chief economist at the Argus media consultancy. The sanctions threaten to take out ‘half’ of those supplies, he said, given the measures prevent the two firms from selling their cargoes in dollars, the currency used almost exclusively for trading crude internationally.” (Politico, 10.24.25)
• Daily Beast contributor Anna Nemtsova wrote: “Western sanctions have frozen hundreds of billions of dollars in assets, and crippled imports of technology and machinery. The ruble is sinking, prices are soaring, and the Kremlin has resorted to raiding pension funds and regional budgets to keep the war machine running. Russian economists estimate the country’s “shadow budget” for military spending has nearly doubled since 2022, while hospitals, schools, and infrastructure crumble. The central bank’s emergency interest-rate hikes—now around 18%—have strangled credit for small businesses and families.” (Daily Beast, 10.25.25)
• Melissa Lawford, U.S. economics writer at the UK’s The Telegraph, stated in her Oct. 26 piece, which assesses the impact of the latest U.S. sanctions on Russian oil exports, that: “Russia’s economy is beginning to buckle.” (The Telegraph, 10.26.25)
• Alexander Kolyandr of the Center for Economic Policy Analysis wrote: “The sanctions alone are unlikely to force Putin to negotiate or collapse the economy. However, they will create long-term consequences, add to the slowing of the economy, and put more pressure on the budgetary spending in the future.” (Center for Economic Policy Analysis,10.28.25)
• Thomas Duesterberg of Hudson Institute stated: “The hard-hitting sanctions that President Donald Trump imposed this month on major Russian oil companies can deliver a serious blow to the teetering Russian economy, if they're rigorously enforced—and Trump sticks to his guns .... His [Trump’s] sanctions are significantly reducing Russia's ability to finance its war of aggression. New secondary sanctions on banks in China could also result in Putin losing access to needed technology such as semiconductors, machinery parts and other war-related equipment… There are real concessions to be won. They hinge on rigorous sanctions enforcement against both Russia and the buyers of its energy exports.” (The Washington Post, 10.29.25)
• Re: Russia staff wrote: “Trump’s new sanctions on Rosneft and Lukoil mark a turning point .... As a result of Trump’s new sanctions, oil and gas exports may decline by more than 25% in 2026, and the budget could lose more than 1 trillion rubles… More than 2 million barrels per day of Russian oil and petroleum product exports, or about 30% of Russia’s total oil exports, are now under threat from the sanctions… Oil and gas export revenues may fall by 15% in 2026 due to the sanctions factor alone, with the price factor contributing at least another 10% decline.” (Re: Russia, 10.31.25)

Crippling impact on the Russian economy unlikely:

• ‘“I think the short-term impact of these sanctions will be limited,” said Alexandra Prokopenko, a former adviser at the Russian Central Bank, now an analyst at the Carnegie Russia Eurasia Center in Berlin. “Both companies were likely preparing for them. Furthermore, significant volumes of oil exports are denominated in yuan and rubles, so I don't expect any dramatic impact on the budget,” she said.’ (RFE/RL, 10.23.25)
• “The majority of Chinese and Indian buyers, Russia’s two largest oil trading partners, are likely to continue importing from Moscow, said Homayoun Falakshahi, head of crude oil analysis at the Kpler commodities firm.” (Politico, 10.24.25)
• “Experience suggests Russia will turn to its shadow fleet, obscure networks of intermediaries and nondollar financial channels to sidestep the sanctions.” (The Wall Street Journal, 10.29.25)
• The Wall Street Journal columnist Carol Ryan wrote, “If Iran can keep its energy exports flowing under heavy restrictions, Moscow probably can, too,” noting Brent crude only rose $5 to $66 a barrel after the latest U.S. sanctions on Rosneft and Lukoil. She observes that the sanctions “will disrupt supply to Moscow's top energy customers, China and India,” but predicts “the long-term impact on oil prices could be mild,” as buyers are already seeking Middle Eastern alternatives. Ryan concludes Russia will likely “find ways around restrictions by setting up new supply chains … and redoubling efforts to disguise where cargoes have come from.” (The Wall Street Journal, 10.25.25)⁴
• The new sanctions “will definitely be mitigated by sanctions proofing that not only Rosneft and LUKoil have done but also their buyers,” said Rachel Ziemba, a sanctions researcher at the Center for a New American Security in Washington. (RFE/RL, 10.23.25)
• Sergey Vakulenko of the Carnegie Russia Eurasia Center wrote that “The sanctions against Rosneft and Lukoil attracted a lot of attention because they are the first to be introduced since Trump returned to the White House. Apart from that, there was little new about the measures.” He noted earlier sanctions on Surgutneftegas and Gazprom Neft “did not dent oil production or export volumes for either company,” and predicted “Rosneft and Lukoil will be able to continue operating in a similar fashion, despite the U.S. restrictions.” Because both firms [Lukoil and Rosneft] hold minority stakes in many of their foreign projects, the ventures themselves could avoid direct sanctions, he wrote. (Carnegie Politika, 10.28.25)⁵
• "They [the U.S.] are trying to thread a needle. They have clearly been given instructions not to blow up the global economy, so that does mean they are going to be using sanctions against third or fourth league targets," said Richard Nephew, a former senior U.S. State Department sanctions official. "Based on what we have seen so far, they are basically doing a signaling operation with the hope of inflicting some damage." (The Wall Street Journal, 10.29.25)
• Georgi Kantchev and Laurence Norman wrote in the Wall Street Journal that in January Washington blacklisted Gazprom Neft and Surgutneftegas, the third and fourth-biggest Russian producers. But analysts at J.P. Morgan say that while documented exports from these companies fell, overall Russian seaborne volumes were maintained by using newly established entities not legally connected to the sanctioned companies as well as shadow shipping. (The Wall Street Journal, 10.29.25)
• Clayton Seigle of the Center for Strategic & International Studies predicted that: “Rosneft and Lukoil volumes will likely continue to reach the market, relabeled without the sanctioned company names. Oil formerly tagged as Rosneft and Lukoil will instead be sold by newly incorporated entities in Russia.” (CSIS, 10.31.25.)

Context:

• Russian armed forces have continued to make advances in Ukraine this fall.
• U.S. efforts to mediate a ceasefire or peace between Ukraine and Russia have recently stalled.
• Russian Finance Ministry data show that from January to August this year, Russia ran a budget deficit of 4.9 trillion rubles ($61.44 billion), or 2.2% of gross domestic product. Russia targets a deficit of 1.7% of GDP this year, having tripled it in May (Reuters, 08.07.25)
• Russia’s economy is heading toward stagnation rather than a “managed slowdown,” the World Bank said in its latest forecast, cutting its growth outlook and warning that output is unlikely to rise more than 1% per year through 2028. The international development organization now expects Russia’s GDP to grow 0.9% in 2025 (down from 1.4% in its June forecast), 0.8% in 2026 and 1% in 2027. (Moscow Times, 10.08.25)
• Russia’s fossil fuel revenues have dropped to roughly half their late-2022 levels, as sanctions by the U.S. and EU increasingly target its main export routes—oil to China and India, oil products to Turkey, and gas to Europe. Russia exports around 5 million barrels of crude daily, mainly to China (2.2 million barrels) and India (1.5 million barrels). Oil and gas revenues, which make up about a quarter of the federal budget, are projected to fall to 8.65 trillion rubles ($100 billion) in 2025—the lowest since 2020 and a 22% decline from last year—posing a significant strain on Moscow’s war finances. A slight recovery is forecast for 2026. (Foreign Policy, 10.23.26, Financial Times, 10.24.25, Moscow Times, 10.28.25, Bloomberg, 09.29.25)⁶
• Russian regional budgets ran a consolidated deficit of 397.8 billion rubles ($4.93 billion) in the first half of 2025, a figure that ballooned to 724.8 billion ($8.99 billion) by the end of September. A total of 67 regions ended the first half of the year in the red. (Moscow Times, 10.20.25)
• The EU announced the imposition of its 19^th package of sanctions on Russia on Oct. 22, the same day that the U.S. sanctioned Rosneft and Lukoil.
• Adi Imsirovic, formerly of Gazprom, says that a full Indian boycott would be sufficient to really hurt Russia. But it would also boost global prices by at least $10-$15 a barrel, he reckons, compared with the $4 rise so far. (The Economist, 10.23.25)
• As of Oct. 2025, all four of Russia’s major oil companies were under U.S. sanctions, with Rosneft and Lukoil—the largest producers—now also targeted. These companies account for roughly 80% of Russia’s oil exports, and the sanctions come in tandem with new EU energy restrictions. With Rosneft producing about 5.2 million barrels and Lukoil 1.6 million barrels per day, three-quarters of Russian oil exports now come from firms facing fresh U.S. penalties—delivering a major blow to Moscow’s wartime economy. (The Wall Street Journal, 10.23.25, Moscow Times, 10.28.25, Kommersant, 10.23.25).
• Georgi Kantchev and Laurence Norman of the Wall Street Journal: Only about 5% of Russia's oil exports are currently settled in dollars, a sharp drop from 55% before the invasion of Ukraine, according to J.P. Morgan. The ruble now accounts for 24% and the Chinese yuan dominates at 67% of payments, putting most Russian barrels outside the U.S. financial system. (The Wall Street Journal, 10.29.25)
• The Russian government expects inflation to decrease to around 4% in 2026 (compared with 6.8% at the end of this year). (CEIP, 10.01.25)

Footnotes

1. RFE/RL’s own headline was less drastic in its prediction: “Russia's Oil Giants Get Sanctioned By The U.S.. Will It Hurt The Kremlin's War On Ukraine? (For Now, No)”
2. In a major speech at Russia’s Foreign Ministry, Putin referred to the following goals of Russia’s war: “protection of people in Donbass, the restoration of peace, and the demilitarization and denazification of Ukraine.” He also outlined the following conditions for starting peace talks: Ukrainian troops must be completely withdrawn from the Donetsk and Lugansk people’s republics and the Kherson and Zaporozhye regions. “Let me note that they must be withdrawn from the entire territory of these regions within their administrative borders at the time of their being part of Ukraine. As soon as Kiev declares that it is ready to make this decision and begin a real withdrawal of troops from these regions, and also officially notifies that it abandons its plans to join NATO, our side will follow—an order to cease fire and start negotiations will be issued by us that very moment."
3. “The impact of blacklisting Russia’s biggest oil producers—Rosneft and Lukoil—would hinge on three things: how well they are enforced, the reaction of major markets in India and China, and whether Moscow can circumvent the measures as it has up to now… If the U.S. and Europe agree to hit companies and banks trading with the Russian oil giants… the impact would be magnified.” (The Wall Street Journal, 10.23.25.)
4. Amrita Sen, founder of Energy Aspects, said she expected the price to go above $70 a bar­rel. “The mar­ket is try­ing to work out the real impact, but if dis­rup­tion, even if tem­por­ary, is over 2 million bar­rels per day, there will be upward pres­sure on prices,” she added. (Financial Times, 10.23.25.)
5. Sergey Vakulenko also wrote together with another Russian energy expert Tatiana Mitrova, “on October 23, the United States announced new sanctions aimed against key oil companies, including Lukoil and Rosneft; these measures are likely to put temporary pressure on Russian crude exports, compounding the strain on the country’s oil sector.” “Although these repeated attacks cannot destroy a refinery, they can keep it constantly in need of repair, stretching spare-parts supply chains that are already constrained by sanctions,” they wrote. (Foreign Affairs, 11.05.25)
6. Rus­sia’s energy rev­en­ues, which come mainly from oil, dropped by 20% year-on-year in the first nine months of 2025, fin­ance min­istry data shows. (Financial Times, 10.24.25)

Photo credit: AP Photo/Sergey Ponomarev, File.