The latest US sanctions against Russia are already having an effect. Now it comes down to another crucial player.
Oct 29, 2025, 11:06 p.mOct 29, 2025, 11:06 p.m
Julian Alexander Fischer / t-online
For a long time, US President Donald Trump held back on sanctions against Russia and even blocked them. But now his attitude has changed. He canceled a meeting with Kremlin chief Putin. Instead, he imposed sanctions on Russia’s oil industry. These are already having an impact on the Russian economy – even though the sanctions are not yet in force.
The largest Russian oil producers are already reacting to the announcement from Washington with drastic measures. And the situation for Russia’s oil industry is likely to worsen even further in the coming weeks.
What is particularly important is how India will behave as the second largest buyer of Russian oil. Initial signs suggest that India is now looking for alternatives.
Russian oil companies are doing badly
Trump’s sanctions are explicitly aimed at the Russian oil companies Lukoil and Rosneft. Both companies have now announced that they will sell their international assets. At Lukoil, this affects around a third of business activities.
This includes a 75 percent stake in the Iraqi West Qurna-2 oil field as well as minority interests in gas condensate projects in Kazakhstan and Azerbaijan. The company also owns refineries in Bulgaria and Romania. Lukoil holds 49 percent of the Indian energy company Nayara Energy with the Vadinar refinery, which accounts for eight percent of India’s refining capacity.
A Lukoil gas station in Bulgaria.Image: keystone
Foreign companies are not directly affected by the new US sanctions, However, it is “practically impossible” to pay dividends to Russian companiesexplains Sergei Vakulenko, a former Russian oil executive and senior fellow at the Carnegie Endowment for International Peace, to the Moscow Times. There would also be problems with suppliers, banks and other partners. Therefore, all that remains for Rosneft and Lukoil is to sell its foreign holdings – and a significant loss of income.
Lukoil reported significant difficulties even before the sanctions were announced. The company’s profit recently fell by 68 percent. The sale of foreign assets will probably continue to pose a serious problem for Lukoil. A former executive told Politico magazine, The sale will reduce Lukoil’s revenue by “around 30 percent.”. The group will lose three refineries and around half of the approximately 5,000 gas stations worldwide. The ex-manager stated:
India is now the focus
Now it is particularly important for India. The country is the second largest buyer of Russian oil with 1.8 million barrels per day. Indian refiners are ready to sharply reduce imports of Russian oil to comply with new US sanctionsit was said from New Delhi. Many Indian refineries have even stopped buying Russian oil altogether.
US President Donald Trump and Indian Prime Minister Narendra Modi in the White House: India is under pressure.Image: keystone
The largest private refinery operator, Reliance Industries, announced in view of Trump’s sanctions that it will “adjust its refining operations to meet compliance requirements.” However, many other Indian refineries are continuing their imports until further guidelines are received, reports the Reuters news agency.
In the short term, refineries turned to spot markets, where oil is delivered directly for immediate payment. In the long term, the Middle East, Latin America or the USA could supply India with crude oil. The OPEC members have more than three million barrels per day of reserve capacity that could help close any gaps.
But since Russia offers its oil at a discount, the assurance of alternative supplies is probably not enough. India would face additional costs of 1.5 to 3 billion dollars per year. Maximilian Hess from the Foreign Policy Research Institute told the Moscow Times:
“To effectively pressure India, Washington must not only continue to offer alternative supplies, but also make it clear that its recent sanctions include a real threat of secondary sanctions.”
For example, the US could target Russian assets in India by joining European sanctions against the Vadinar refinery.
Russia’s 2026 budget in jeopardy
The consequences for Russia’s economy are definitely noticeable. Energy revenue accounts for a quarter of total household revenue and could continue to decline. This year, oil and gas revenues were already at their lowest level since 2020.
Burning oil refineries (archive image): Ukraine attacks on Russian soil.Image: Screenshot X
Rosneft and Lukoil together are responsible for around half of Russia’s oil exports. After the sanctions announcement, the company’s shares fell significantly. If revenues continue to fall, Russia may have to raise taxes or cut spending to finance the 2026 budget.
But it’s not just the sanctions that threaten Russian oil production. Ukraine has been attacking Russian refineries almost every day for months. It was only on Wednesday night that a facility in the Novospasskoye community caught fire. The chemical factory of a Lukoil subsidiary was also hit.
In Russia, meanwhile, the sanctions are receiving a mixed reception. One blogger reassured that the sanctions would “accumulate over several months; nothing will happen overnight». During this time, Russia will try to adapt internally. Another, however, writes: “Trump has hit Russia’s oil business right in the heart.”