The United States has imposed sweeping sanctions on Rosneft and Lukoil, Russia’s two largest oil companies, in what marks the first major punitive action against Moscow since President Donald Trump took office. The move, announced by the U.S. Department of the Treasury on October 22, aims to intensify economic pressure on the Kremlin and restrict its ability to finance the ongoing war in Ukraine.

Treasury Secretary Scott Bessent described the sanctions as part of Washington’s broader effort to force an immediate ceasefire, calling on U.S. allies to adopt similar measures. “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,” Bessent said, adding that the department “is prepared to take further action if necessary to support President Trump’s effort to end yet another war.”

The sanctions target both Rosneft Oil Company PJSC and Lukoil OAO, along with their subsidiaries and any affiliated entities in which they hold more than a 50 percent stake. All affected companies are now subject to full asset blocking. The restrictions fall under Executive Order No. 14024, which allows the U.S. to sanction entities operating in Russia’s energy sector. The Treasury clarified that foreign financial institutions engaging in transactions involving these companies or Russia’s defense industry could also face secondary sanctions.

Rosneft and Lukoil are key pillars of Russia’s energy sector. Rosneft is involved in exploration, extraction, refining, and distribution of oil and gas both domestically and internationally. Lukoil operates in similar fields and has extensive business interests abroad. The Treasury said the sanctions were designed to weaken the Kremlin’s revenue base and disrupt its capacity to sustain military operations.

President Trump confirmed the decision during a press briefing with NATO Secretary General Mark Rutte, where he also revealed that a planned meeting with Russian leader Vladimir Putin in Budapest had been canceled. “We cancelled the meeting with President Putin. It just didn’t feel right to me. It didn’t feel like we were going to get to the place we have to get. So I cancelled it, but we’ll do it in the future,” Trump said.

The cancellation of the Budapest summit came after Russia once again rejected calls for an immediate ceasefire in Ukraine. According to a senior White House official, the administration no longer saw the need for planned talks between Russian Foreign Minister Sergei Lavrov and U.S. Secretary of State Marco Rubio, which were meant to lay the groundwork for a future Trump-Putin meeting.

Trump called the sanctions “a very big day in terms of what we’re doing,” stressing that the move was not meant to escalate conflict but to accelerate peace efforts. “Those are against their two big oil companies, and we hope that they won’t be on for long. We hope that the war will be settled,” he said. The president also commented on discussions about potentially supplying Tomahawk missiles to Ukraine, clarifying that “it’ll take a minimum of six months, usually a year, to learn how to use them,” and that “the only way a Tomahawk is going to be shot is if we [the U.S.] shot it. And we’re not going to do that.”

Ukraine welcomed the sanctions, describing them as a “historic decision.” Olha Stefanishyna, Ukraine’s ambassador to the U.S., stated that “for the first time in office as the 47th President of the United States, Washington has passed a decision to impose full blocking sanctions against Russian energy companies.” The announcement came just hours after Russia launched a massive missile and drone assault across Ukraine, killing six people and injuring at least 44, with new attacks reported the following evening in Kyiv.

NATO Secretary General Mark Rutte praised Washington’s decision, saying the move would help “change the calculus” and force Moscow to reconsider its position. “It’s all about making sure that Putin understands that the president’s vision of having a ceasefire, stopping where they are, has to be step one now,” Rutte said at the White House.

Despite growing international pressure, the Kremlin has refused to alter its stance. On October 20, spokesperson Dmitry Peskov reiterated that Russia’s conditions for halting hostilities remained unchanged, with Moscow reportedly insisting on the surrender of all of Donetsk Oblast as part of any potential peace arrangement.

The European Council and the European Commission have both signaled support for the U.S. measures, emphasizing that rule of law and democracy must remain central to any negotiations. Washington has said it remains ready to impose further restrictions if Moscow continues to reject peace talks.

Further reading: Trump's Diplomatic Mirage: Why Russia Isn't Seeking Peace