“They are starving Putin’s war machine.” US sanctions are starting to work in earnest

The sanctions imposed by the United States on the Russian oil companies Rosneft and Lukoil are beginning to bring the first noticeable results. According to the US Department of Finance, the restrictions are already limiting Russia’s revenues from oil exports, and in the long run they may lead to a permanent decline in sales of the raw material. According to data from the Russian Ministry of Finance published in November, the budget deficit of the Russian Federation in the first ten months of 2025 reached 4.2 trillion rubles, or approximately USD 51.9 billion. This is the result of increasing war expenses.

Weakening the Kremlin

The US administration emphasizes that the sanctions are part of a broader strategy aimed at weakening the Kremlin’s ability to finance the war against Ukraine. Analysis by the Office of Foreign Assets Control (OFAC) shows that some key types of Russian oil are currently sold at the lowest prices in many years.

The OFAC statement indicated that the decline in the value of the raw material directly translates into lower budget revenues for Moscow. It was emphasized that “sanctions are having the intended effect” because lower oil prices limit the pool of funds with which Russia can supply its military machine.

Significant signals are also coming from Asian markets, which became a key export direction for Russia after the outbreak of the war. More than ten largest oil importers from China and India – countries that have been the most important buyers of Russian raw material in recent years – announced the suspension of purchases for December deliveries. The reason given is the growing sanction risks and more attractive conditions offered by competing producers.

Oil prices fell

Last week, Urals oil prices fell to their lowest level in over two and a half years, according to Bloomberg data. Even before the sanctions come into full force, some refineries in India, China and Turkey have already limited purchases of Russian raw material, directing demand towards suppliers from the Middle East and Africa. Markets see this as evidence that the pressure from Donald Trump’s administration, which announced restrictions, is causing rapid and profound changes in oil trading.

A spokesman for the US Department of Finance said the sanctions “starve Putin’s war machine” and announced Washington’s readiness to take further action if necessary to limit Russia’s ability to continue aggression against Ukraine. According to the adopted rules, companies doing business with Rosneft and Lukoil have until November 21 to end their cooperation. After this date, they will be at risk of being cut off from the dollar-based financial system, which could have serious operational consequences.

This situation significantly increases the pressure on the Russian economy. Oil and gas exports account for approximately one quarter of state budget revenues, so any restriction of access to key sales markets automatically weakens public finances. This means less possibility of financing the army and stabilizing the economy burdened by the costs of war.

Experts warn that if the current trend continues, Russia may face the most serious crisis in revenues from the energy sector in years. The effects of the sanctions, although initially moderate, may increase each month as restrictions expand and more buyers withdraw from contracts for Russian oil.