From Kyiv Independent
This week went from Donald Trump organizing a meeting with Vladimir Putin in Budapest, adding that Russia "won certain property" in Ukraine, to the U.S. imposing harsh sanctions on Russia's oil behemoths — Lukoil and Rosneft.
Hi, my name is Oleksiy Sorokin, I'm the deputy chief editor of the Kyiv Independent, and this is the latest issue of our newsletter about Russia.
Today we will discuss the latest news and try to make sense of it — how will Russia be affected by the new sanctions and will it force Moscow to change course.
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| At the Kyiv Independent, we don't have a wealthy owner or a paywall — we rely on readers like you to keep our journalism alive.
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| Working in the news is now a rollercoaster. One of our journalists had to rewrite a story three times this week because the U.S. President Donald Trump was shifting his stance back and forth, and no one knew what the official line would be in the next couple of hours.
We ran the story on Trump's peacemaking loop today. I will link it below.
But as of Oct. 23, 9 p.m. Kyiv time, this is what is going on — the U.S. has imposed sanctions on Russia's two largest oil companies, Rosneft and Lukoil, in an effort to pressure Moscow into agreeing to a ceasefire.
The measures are the first new sanctions Trump has imposed against Moscow since taking office in January.
"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," U.S. Treasury Secretary Scott Bessent said.
The new penalties come after planned diplomatic talks between the U.S. and Russia fell apart. Trump and Putin were previously set to meet in Budapest, rattling both Ukrainians and Europeans, but the White House later announced the summit was canceled.
"It didn't feel like we were going to get to the place we have to get — so I canceled it, but we'll do it in the future," Trump said.
Putin tried to play it tough.
He said that "no self-respecting country does anything under pressure."
The Kremlin's chief described the sanctions as an "unfriendly act" that would harm Russia-U.S. relations, but sought to downplay their potential impact on the Russian economy.
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|  (L-R) Indian Prime Minister Narendra Modi, Russian President Vladimir Putin, and Chinese President Xi Jinping during the BRICS summit in Kazan, Russia, on Oct. 23, 2024. (Alexander Zemlianichenko / POOL / AFP via Getty Images)
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| And of course it is a lie. If the sanctions are properly enforced, they would rock Russian oil exports in the short and medium term.
Rosneft and Lukoil account for nearly half of the country's crude-oil exports, around 3.1 million barrels per day, according to Russian estimates.
State-controlled Rosneft, led by Putin's close friend Igor Sechin, produces about 40% of Russia's oil. Lukoil, the country's largest private energy company, accounts for roughly 15% of the national output and 2% of the global production.
The new sanctions extend far beyond the parent companies, covering six Lukoil subsidiaries and 28 Rosneft enterprises. Among them is Lukoil-Western Siberia, which alone accounts for around 40% of the group's hydrocarbon production.
According to Bloomberg, which cited unnamed executives at Indian oil companies, India's biggest refineries are expected to reduce purchases from Rosneft and Lukoil to virtually zero.
In September, India imported 1.6 million barrels of Russian oil per day, roughly 36% of its total needs. At their peak earlier this year, shipments reached 2 million barrels daily.
For Moscow, India has been the largest market for seaborne oil exports and the second-largest overall buyer after China. The new restrictions threaten to close that crucial outlet.
"The new U.S. sanctions are currently quite a shock for the Russians, and the buyers of Russian oil, especially India," Vasily Astrov, senior economist at the Vienna Institute for International Economic Studies, told the Kyiv Independent today.
He added, however, that cheap Russian oil remains attractive to Asian markets and that ways to circumvent these new restrictions would be found sooner rather than later.
A closer economic analysis of this topic is available in our story, which is also linked below.
So where does this leave us?
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|  An employee wears a branded jacket on a platform above the Lukoil petroleum refinery, operated by OAO Lukoil, in Nizhny Novgorod, Russia, on Thursday, Dec. 15, 2011. (Andrey Rudakov/Bloomberg via Getty Images)
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| Well, let's say that the Trump administration maintains the current approach, keeps sanctions in place, makes sure they are followed and slaps new restrictions on Russia if Putin continues to decline to cooperate. Then, Russia will have a serious problem.
Not because its economy will suddenly collapse. But because it will signal a shift in perception. If the U.S. shows its teeth, Europe will follow. If the U.S. actually decides to hit Russia where it hurts, it will.
And about the economy not collapsing, an actual blanket ban on Russian oil exports, and the subsequent substitution of Russian energy with that from the U.S. and the Middle East can do the trick.
And what's important to note here is that in this situation, Putin will most likely double down and invite more pressure to follow.
The Kremlin sees it as uncool to back down. If a tainted Russian official is sticking out like a sore thumb, Putin is known to keep him in office for as long as it takes, only to not be seen as caving under pressure. It is hard to imagine that Putin would now decrease his appetite in Ukraine, only to be seen as someone who was forced to do so by Trump.
The silver lining of all of this, of course, is that the final cracking of the Trump-Putin bromance, if it happens, will boost Ukraine's chances at getting a better deal.
Putin relies on paying vast sums of money in order to entice people to sign up voluntarily, which they continue to do in droves — up to 40,000 a month according to NATO estimates from August.
The math is simple here: the less there is to pay, the fewer people would volunteer to fight.
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