US Moves Put More Pressure on Russian Oil Companies
US President Donald Trump has imposed sanctions on major Russian oil firms with the aim of ratcheting up economic pressure on Russia and, at the same time, pushing for an end to the war in Ukraine. The US Department of the Treasury said the sanctions have created strong financial strain on Moscow's energy sector.
Declining Buyers from India and China
- Trump's action has targeted Russia's two most prominent oil companies: Rosneft and Lukoil. According to a senior Treasury official, because buyers in India and China have stepped back from buying, the price of oil is falling in Russia. He added that the reduced demand has tightened Russia's financial resources for the war.
- The official also said buyers are canceling or delaying advance orders. Some have reached out to the US for guidance on how to reduce their ties with Rosneft and Lukoil.
Impact on Russia's Revenue Structure
- Russia is heavily reliant on oil and gas exports for government revenue. Rosneft and Lukoil produce roughly half of the country's total oil exports. Trump hit both companies with sanctions on October 22 and warned any business conducted with their subsidiaries could also result in penalties.
- US Peace Plan Developments Meanwhile, the US has prepared a peace proposal with 28 principles in order to end the conflict between Ukraine and Russia. According to the plan, Ukraine would have to cede some territory and reduce the size of its army. It's reported that the proposal seems to favor Russia. The plan has been given to Ukrainian President Zelensky, but an official declaration is yet to be made publicly.
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