October 23, 2025 • 12 mins
In this episode we dive into the bold move from the U.S. government: sanctions on Russia’s two largest oil companies, Rosneft and Lukoil, in an attempt to stifle Moscow’s revenues from oil exports and pressure a resolution to the war in Ukraine.
We examine: what the sanctions entail (asset freezes, U.S. business prohibitions, 3.1 million barrels/day impact), why the Trump administration is leaning into energy policy as war leverage, how Russia has diverted exports to China and India, and what it means for global oil markets and U.S. strategic interests.
Listen to the end for expert insights on oil prices, secondary sanctions, and whether this move could truly weaken Putin’s war machine. Subscribe now for sharp U.S. political news and global affairs breakdowns.
#USPolitics #RussiaSanctions #OilSanctions #EnergySecurity #Rosneft #Lukoil #TrumpNews #GlobalEconomy #UkraineWar #OilMarket #USForeignPolicy #Putin #WhiteHouse #PoliticalPodcast #BreakingNews #InternationalRelations #TradeWar #CrudeOil #StrategicPolicy #Geopolitics
Become a supporter of this podcast: https://www.spreaker.com/podcast/the-political-current--6768289/support.
We examine: what the sanctions entail (asset freezes, U.S. business prohibitions, 3.1 million barrels/day impact), why the Trump administration is leaning into energy policy as war leverage, how Russia has diverted exports to China and India, and what it means for global oil markets and U.S. strategic interests.
Listen to the end for expert insights on oil prices, secondary sanctions, and whether this move could truly weaken Putin’s war machine. Subscribe now for sharp U.S. political news and global affairs breakdowns.
#USPolitics #RussiaSanctions #OilSanctions #EnergySecurity #Rosneft #Lukoil #TrumpNews #GlobalEconomy #UkraineWar #OilMarket #USForeignPolicy #Putin #WhiteHouse #PoliticalPodcast #BreakingNews #InternationalRelations #TradeWar #CrudeOil #StrategicPolicy #Geopolitics
Become a supporter of this podcast: https://www.spreaker.com/podcast/the-political-current--6768289/support.
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
Welcome to the debate. Today. We're looking at quite a
significant development from the Trump administration. That's the imposition of
direct sanctions targeting Russia's two biggest oil players, Rosnef, the
Kremlin controlled giant, and Luke Oil, which is the largest
non state company. Now, this is really the first time
this administration has taken such direct aim and the stated
(00:22):
goal seems clear enough. It's about pressuring Moscow, trying to
cut off the oil money that fuels the war effort,
especially after the recent renewed attacks in Ukraine. So the
central question that really emerges from all this is you
will these new sanctions, and particularly this threat of secondary
sanctions hanging over foreign banks, well they actually be effective?
(00:44):
Can they significantly choke off Russia's oil revenues considering how
resilient they've proven to be, especially since twenty twenty two. Right,
I'm going to argue that, yes, these measures are different.
They represent a real shift, a potentially very effective strategy
because they hit the financial mechanisms Russia now heavily relies on.
Speaker 2 (01:01):
And I'll be taking the, let's say, more skeptical view.
I think looking at the evidence, there's reason to doubt
these sanctions can fundamentally stop Russia's oil trade or really
change the course of the war itself.
Speaker 3 (01:14):
Okay, well, let me lay out my position first them. Look,
I understand the point about historical precedent, but I think
what makes this different is the mechanism. First, just consider
the sheer scale. We're talking about Rosneft and Luke Oil together.
They export something like three point one million barrels of
oil per day. That's seventy percent seven zero of Russia's
entire overseas crude sales. Rosneft alone produces almost half the
(01:37):
country's total oil. So targeting companies of this magnitude it's
inherently structural. It's not a minor tweak. But the real
game changer, I believe, is the explicit threat of secondary
sanctions from the US Treasury. This isn't just about freezing
assets in the US anymore. The warning is very clear.
If you're a foreign bank anywhere and you engage in
(01:59):
certain with Rosneft or Luke Oil, you yourself risk being
hit with sanctions. You risk losing access to the US
financial system. This directly attacks the financial plumbing, if you will,
that enabled Russia's pivot to Asia. We saw the market
react immediately. Brent krude jumped almost four percent, WTI over
five percent. That's not just noise, that reflects real market
(02:22):
perception of supply risk. And we even heard from refinery
executives in India saying these restrictions could make purchases quote impossible.
Speaker 2 (02:31):
Okay, I hear you on the secondary sanctions point, and yes,
the targeting is severe. Rosneft and Luke Oil are, without
doubt the beheliths of Russian oil. But let's step back.
We have seen Russia adapt before quite successfully. Actually, remember
twenty twenty two. They faced significant Western financial restrictions then too,
(02:52):
and what happened. They pivoted. They shifted huge volumes away
from Europe towards Asia, primarily China and India. And they
did this using the so called shadow fleet tankers operating
outside Western finance, outside Western insurance. Right, But the financing
is key, exactly, and that's my point. While these new
measures add pressure, Russia has already demonstrated an ability to
(03:16):
build or utilize alternative infrastructure. The demand from Asia isn't trivial,
it's enormous. China imported a record one hundred and nine
million tons of Russian crewed last year, way up from
twenty twenty one. India's jump is even more stark, eighty
eight million tons in twenty twenty four, up from practically
(03:36):
nothing just a few years ago. This isn't just opportunistic buying.
It's become structural demand for discounted oil. This creates a
powerful inertia, and that commodity trader you mentioned, while acknowledging
the pressure, also said, I don't think this will be
the driver in ending the war, as Russia will continue
selling oil. There are always players willing to take risk,
(04:00):
especially for the right price. And that market jump you cited,
while the same expert predicted it was likely an overjump
that would correct given the gloomy global economic outlook.
Speaker 1 (04:12):
Okay, let's dig into that vulnerability versus resilience point. You're
emphasizing the shadow fleet and non Western finance. I still
contend that the global reach of the US financial system
is the critical vulnerability here. Yes, Russia built alternatives, but
can those alternatives truly handle the scale and complexity without
eventually touching the dollar system. Most significant global banks, even
(04:36):
major ones in Asia or the Middle East, facilitating these deals,
they still rely heavily on US dollar clearing for their
broader international business. Losing access to that network is frankly
an existential threat for many. So the secondary sanctions threat
forces a very difficult choice. Make potentially high margins on
risky Russian oil deals or maintain your lifeline to the
(04:59):
glos global financial system dominated by the dollar. For the
really big banks, the ones needed to smoothly facilitate trade
with China and India at this scale, that calculus often
favors caution. It potentially dries up the easy liquidity for
these Russian transactions.
Speaker 2 (05:15):
That's the theory, the classic treasury leverage argument, and it
certainly applies to some institutions, maybe even many, But it
rests on the assumption that everyone prioritizes dollar access above
all else, and that the US can effectively police every
single transaction linked to what three point one million barrels
a day. We're seeing a definite trend towards d dollarization
(05:38):
in certain trade corridors using local currencies, purpose built payment
systems banks specifically designed to operate outside direct US oversight.
That are those truly scalable yet maybe not universally, but
enough to matter, I think so remember the quote, it
won't stop it completely. We're talking about potentially hundreds of
(05:58):
billions in revenue. That kind of money creates its own gravity.
It attracts niche financial players, perhaps state backed entities in
jurisdictions less worried about US diplomatic fallout, who are willing
to manage that risk. And let's not forget the context
you're initially raised. Both Roseneft and Luke Oil were already hurting.
Rosniff's income plunged sixty eight percent in the first half
(06:21):
of twenty twenty five. Luke Oil's profits fell twenty seven
percent in twenty twenty four. So while these new sanctions
at pain, they're hitting companies already operating under significant stress
and finding ways to cope. The question is is this
the final straw or just more pressure they'll adapt to.
Speaker 1 (06:38):
Well, that's exactly my point. Hitting them when they're already
weakened makes the incremental impact potentially devastating. It accelerates the
financial drain, forces harder choices back in Moscow about where
the remaining money goes. But let's shift to the buyers
China and India. You rightly point out their huge demand,
but the political heat from the US is undeniable.
Speaker 2 (06:59):
Now.
Speaker 1 (07:00):
Trump already hit India with that extra twenty five percent
tariff back in August, specifically for buying discounted Russian oil,
and he signaled he'll raise it with Shijin Ping at
the APEX summit. So continuing these massive imports now comes
with a much higher diplomatic and economic price tag than
just getting cheap oil. Those comments from the Indian refiner
executives saying purchases might become impossible, that suggests the risk
(07:24):
calculation is changing for key players. They're seeing the potential
fallout from secondary sanctions is too high.
Speaker 2 (07:30):
Okay, the Indian comment is notable, I grant you, but
is it a definitive policy shift for New Delhi or
Beijing or just a problem for those specific refiners, for
state backed giants in China. For India's overall energy security,
getting stable discounted energy is well, it's a core national interest.
(07:51):
China gets nearly twenty percent of its imported crewed from Russia.
Now India's reliance has exploded. Are we really saying a
twenty five percent tariff on others rids or a stern
talking to it a summit is enough for them to
voluntarily give up billions in savings and risk energy instability.
Their track record suggests they often compartmentalize. They see energy
(08:12):
supply as separate from broader geopolitics. And crucially, the US
hasn't yet hit China with a similar massive tariff over this,
suggesting perhaps there's a limit to how far Washington is
willing to push Beijing directly on this front. That gives
China room to maneuver. The lure of cheap energy often
outweighs political friction.
Speaker 4 (08:29):
All right, even if we can see that some volume
continues to flow, let's focus on the ultimate goal, impacting
Russia's ability to fund the war. My core argument isn't
necessarily that sales will drop to zero overnight. It's that
the net revenue actually reaching the Kremlin will plummet. How So,
think about it if Russia used to sell a barrel
(08:50):
ats say eighty dollars, but now, because of the increased
risk and complexity, they have to offer a twenty dollars
discount and pay maybe an extra fifteen dollars in costs
for evasive shipping, complex insurance risk premiums to those willing
banks you mentioned. That's thirty five dollars less net revenue
per barrel. Multiply that difference across millions of barrels every day. That,
(09:11):
combined with asset freezes and blocking US firms, severely cuts
the actual cash available for the military budget. It weakens
the war machine significantly, even if oil is still technically
being sold.
Speaker 2 (09:22):
I agree the net revenue will almost certainly decrease, the
friction costs will go up, but will that translate into
the desired military outcome. Russia still controls the physical assets,
the production capacity for seventy percent of its exports. History
shows that when regimes face this kind of incremental financial squeeze,
(09:44):
they often tighten belts domestically, maybe sacrifice civilian spending, but
they find ways to prioritize funding for their security apparatus
and military campaigns. The stated goal here is pushing towards
a piece deal, and the expert opinion we've discussed suggests
this financial pressure, while real, probably won't be the thing
(10:05):
that actually ends the war. Russia has shown it can
keep its military going despite severe sanctions already. Does this
new layer move the needle from making things difficult to
making things impossible? I remain skeptical. It achieves that level
of strategic paralysis.
Speaker 1 (10:24):
So, to wrap up my view, targeting Rosneft and Luke
Oil directly combined with this very potent, very targeted threat
of secondary sanctions on the financial middlemen, it really does
represent a significant escalation. It's a sophisticated attempt to choke
off the financial flows, especially the dollar dependent ones that
(10:47):
have sustained Russia's oil exports since the pivot in twenty
twenty two. The economic reality is most major global financial
players just cannot risk being cut off from the dollar system.
This pressure, this financial tax on every barrel sold, will
I believe, substantially weaken the Kremlin's capacity to wage war.
Speaker 2 (11:07):
And from my perspective, while acknowledging the power of US
financial leverage, I'm just not convinced this is the silver bullet.
We've seen Russia's play but fravasion. We see the immense
ongoing energy needs of giants like China and India who
prioritize cheap supply, and we know there are market players
(11:28):
out there willing to manage high risks for high rewards.
So yes, these sanctions will definitely raise Russia's costs. Add
complexity squeeze their margins know that about it, But are
they likely to cause the kind of immediate catastrophic collapse
in oil revenue needed to fundamentally change moscow strategic calculus
on the war. I think that's unlikely. The war machine, unfortunately,
(11:51):
will likely grind on, perhaps just a bit less efficiently funded.
Speaker 1 (11:54):
It seems. The real test, then, will be the persistence
and rigor with which the US Treasury actually enforces these
secondary sanctions threats, and how nations like China and India
ultimately weigh the economic benefits against the potential financial and
diplomatic costs. There's certainly more to unpack here about how
finance is being used as a tool of geopolitics.
Speaker 2 (12:16):
Indeed, it's a complex equation, with global energy security on
one side and financial warfare on the other. Will undoubtedly
be watching closely to see how it unfold
Welcome to the debate. Today. We're looking at quite a
significant development from the Trump administration. That's the imposition of
direct sanctions targeting Russia's two biggest oil players, Rosnef, the
Kremlin controlled giant, and Luke Oil, which is the largest
non state company. Now, this is really the first time
this administration has taken such direct aim and the stated
(00:22):
goal seems clear enough. It's about pressuring Moscow, trying to
cut off the oil money that fuels the war effort,
especially after the recent renewed attacks in Ukraine. So the
central question that really emerges from all this is you
will these new sanctions, and particularly this threat of secondary
sanctions hanging over foreign banks, well they actually be effective?
(00:44):
Can they significantly choke off Russia's oil revenues considering how
resilient they've proven to be, especially since twenty twenty two. Right,
I'm going to argue that, yes, these measures are different.
They represent a real shift, a potentially very effective strategy
because they hit the financial mechanisms Russia now heavily relies on.
Speaker 2 (01:01):
And I'll be taking the, let's say, more skeptical view.
I think looking at the evidence, there's reason to doubt
these sanctions can fundamentally stop Russia's oil trade or really
change the course of the war itself.
Speaker 3 (01:14):
Okay, well, let me lay out my position first them. Look,
I understand the point about historical precedent, but I think
what makes this different is the mechanism. First, just consider
the sheer scale. We're talking about Rosneft and Luke Oil together.
They export something like three point one million barrels of
oil per day. That's seventy percent seven zero of Russia's
entire overseas crude sales. Rosneft alone produces almost half the
(01:37):
country's total oil. So targeting companies of this magnitude it's
inherently structural. It's not a minor tweak. But the real
game changer, I believe, is the explicit threat of secondary
sanctions from the US Treasury. This isn't just about freezing
assets in the US anymore. The warning is very clear.
If you're a foreign bank anywhere and you engage in
(01:59):
certain with Rosneft or Luke Oil, you yourself risk being
hit with sanctions. You risk losing access to the US
financial system. This directly attacks the financial plumbing, if you will,
that enabled Russia's pivot to Asia. We saw the market
react immediately. Brent krude jumped almost four percent, WTI over
five percent. That's not just noise, that reflects real market
(02:22):
perception of supply risk. And we even heard from refinery
executives in India saying these restrictions could make purchases quote impossible.
Speaker 2 (02:31):
Okay, I hear you on the secondary sanctions point, and yes,
the targeting is severe. Rosneft and Luke Oil are, without
doubt the beheliths of Russian oil. But let's step back.
We have seen Russia adapt before quite successfully. Actually, remember
twenty twenty two. They faced significant Western financial restrictions then too,
(02:52):
and what happened. They pivoted. They shifted huge volumes away
from Europe towards Asia, primarily China and India. And they
did this using the so called shadow fleet tankers operating
outside Western finance, outside Western insurance. Right, But the financing
is key, exactly, and that's my point. While these new
measures add pressure, Russia has already demonstrated an ability to
(03:16):
build or utilize alternative infrastructure. The demand from Asia isn't trivial,
it's enormous. China imported a record one hundred and nine
million tons of Russian crewed last year, way up from
twenty twenty one. India's jump is even more stark, eighty
eight million tons in twenty twenty four, up from practically
(03:36):
nothing just a few years ago. This isn't just opportunistic buying.
It's become structural demand for discounted oil. This creates a
powerful inertia, and that commodity trader you mentioned, while acknowledging
the pressure, also said, I don't think this will be
the driver in ending the war, as Russia will continue
selling oil. There are always players willing to take risk,
(04:00):
especially for the right price. And that market jump you cited,
while the same expert predicted it was likely an overjump
that would correct given the gloomy global economic outlook.
Speaker 1 (04:12):
Okay, let's dig into that vulnerability versus resilience point. You're
emphasizing the shadow fleet and non Western finance. I still
contend that the global reach of the US financial system
is the critical vulnerability here. Yes, Russia built alternatives, but
can those alternatives truly handle the scale and complexity without
eventually touching the dollar system. Most significant global banks, even
(04:36):
major ones in Asia or the Middle East, facilitating these deals,
they still rely heavily on US dollar clearing for their
broader international business. Losing access to that network is frankly
an existential threat for many. So the secondary sanctions threat
forces a very difficult choice. Make potentially high margins on
risky Russian oil deals or maintain your lifeline to the
(04:59):
glos global financial system dominated by the dollar. For the
really big banks, the ones needed to smoothly facilitate trade
with China and India at this scale, that calculus often
favors caution. It potentially dries up the easy liquidity for
these Russian transactions.
Speaker 2 (05:15):
That's the theory, the classic treasury leverage argument, and it
certainly applies to some institutions, maybe even many, But it
rests on the assumption that everyone prioritizes dollar access above
all else, and that the US can effectively police every
single transaction linked to what three point one million barrels
a day. We're seeing a definite trend towards d dollarization
(05:38):
in certain trade corridors using local currencies, purpose built payment
systems banks specifically designed to operate outside direct US oversight.
That are those truly scalable yet maybe not universally, but
enough to matter, I think so remember the quote, it
won't stop it completely. We're talking about potentially hundreds of
(05:58):
billions in revenue. That kind of money creates its own gravity.
It attracts niche financial players, perhaps state backed entities in
jurisdictions less worried about US diplomatic fallout, who are willing
to manage that risk. And let's not forget the context
you're initially raised. Both Roseneft and Luke Oil were already hurting.
Rosniff's income plunged sixty eight percent in the first half
(06:21):
of twenty twenty five. Luke Oil's profits fell twenty seven
percent in twenty twenty four. So while these new sanctions
at pain, they're hitting companies already operating under significant stress
and finding ways to cope. The question is is this
the final straw or just more pressure they'll adapt to.
Speaker 1 (06:38):
Well, that's exactly my point. Hitting them when they're already
weakened makes the incremental impact potentially devastating. It accelerates the
financial drain, forces harder choices back in Moscow about where
the remaining money goes. But let's shift to the buyers
China and India. You rightly point out their huge demand,
but the political heat from the US is undeniable.
Speaker 2 (06:59):
Now.
Speaker 1 (07:00):
Trump already hit India with that extra twenty five percent
tariff back in August, specifically for buying discounted Russian oil,
and he signaled he'll raise it with Shijin Ping at
the APEX summit. So continuing these massive imports now comes
with a much higher diplomatic and economic price tag than
just getting cheap oil. Those comments from the Indian refiner
executives saying purchases might become impossible, that suggests the risk
(07:24):
calculation is changing for key players. They're seeing the potential
fallout from secondary sanctions is too high.
Speaker 2 (07:30):
Okay, the Indian comment is notable, I grant you, but
is it a definitive policy shift for New Delhi or
Beijing or just a problem for those specific refiners, for
state backed giants in China. For India's overall energy security,
getting stable discounted energy is well, it's a core national interest.
(07:51):
China gets nearly twenty percent of its imported crewed from Russia.
Now India's reliance has exploded. Are we really saying a
twenty five percent tariff on others rids or a stern
talking to it a summit is enough for them to
voluntarily give up billions in savings and risk energy instability.
Their track record suggests they often compartmentalize. They see energy
(08:12):
supply as separate from broader geopolitics. And crucially, the US
hasn't yet hit China with a similar massive tariff over this,
suggesting perhaps there's a limit to how far Washington is
willing to push Beijing directly on this front. That gives
China room to maneuver. The lure of cheap energy often
outweighs political friction.
Speaker 4 (08:29):
All right, even if we can see that some volume
continues to flow, let's focus on the ultimate goal, impacting
Russia's ability to fund the war. My core argument isn't
necessarily that sales will drop to zero overnight. It's that
the net revenue actually reaching the Kremlin will plummet. How So,
think about it if Russia used to sell a barrel
(08:50):
ats say eighty dollars, but now, because of the increased
risk and complexity, they have to offer a twenty dollars
discount and pay maybe an extra fifteen dollars in costs
for evasive shipping, complex insurance risk premiums to those willing
banks you mentioned. That's thirty five dollars less net revenue
per barrel. Multiply that difference across millions of barrels every day. That,
(09:11):
combined with asset freezes and blocking US firms, severely cuts
the actual cash available for the military budget. It weakens
the war machine significantly, even if oil is still technically
being sold.
Speaker 2 (09:22):
I agree the net revenue will almost certainly decrease, the
friction costs will go up, but will that translate into
the desired military outcome. Russia still controls the physical assets,
the production capacity for seventy percent of its exports. History
shows that when regimes face this kind of incremental financial squeeze,
(09:44):
they often tighten belts domestically, maybe sacrifice civilian spending, but
they find ways to prioritize funding for their security apparatus
and military campaigns. The stated goal here is pushing towards
a piece deal, and the expert opinion we've discussed suggests
this financial pressure, while real, probably won't be the thing
(10:05):
that actually ends the war. Russia has shown it can
keep its military going despite severe sanctions already. Does this
new layer move the needle from making things difficult to
making things impossible? I remain skeptical. It achieves that level
of strategic paralysis.
Speaker 1 (10:24):
So, to wrap up my view, targeting Rosneft and Luke
Oil directly combined with this very potent, very targeted threat
of secondary sanctions on the financial middlemen, it really does
represent a significant escalation. It's a sophisticated attempt to choke
off the financial flows, especially the dollar dependent ones that
(10:47):
have sustained Russia's oil exports since the pivot in twenty
twenty two. The economic reality is most major global financial
players just cannot risk being cut off from the dollar system.
This pressure, this financial tax on every barrel sold, will
I believe, substantially weaken the Kremlin's capacity to wage war.
Speaker 2 (11:07):
And from my perspective, while acknowledging the power of US
financial leverage, I'm just not convinced this is the silver bullet.
We've seen Russia's play but fravasion. We see the immense
ongoing energy needs of giants like China and India who
prioritize cheap supply, and we know there are market players
(11:28):
out there willing to manage high risks for high rewards.
So yes, these sanctions will definitely raise Russia's costs. Add
complexity squeeze their margins know that about it, But are
they likely to cause the kind of immediate catastrophic collapse
in oil revenue needed to fundamentally change moscow strategic calculus
on the war. I think that's unlikely. The war machine, unfortunately,
(11:51):
will likely grind on, perhaps just a bit less efficiently funded.
Speaker 1 (11:54):
It seems. The real test, then, will be the persistence
and rigor with which the US Treasury actually enforces these
secondary sanctions threats, and how nations like China and India
ultimately weigh the economic benefits against the potential financial and
diplomatic costs. There's certainly more to unpack here about how
finance is being used as a tool of geopolitics.
Speaker 2 (12:16):
Indeed, it's a complex equation, with global energy security on
one side and financial warfare on the other. Will undoubtedly
be watching closely to see how it unfold
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