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(CNN) — The Biden administration on Friday targeted Russia’s energy sector, including its oil industry, with some of its harshest sanctions to date meant to cut off funding for Moscow’s war against Ukraine.
The sweeping moves, taken just over a week before President Joe Biden leaves office, come as President-elect Donald Trump says he is readying to meet Russian President Vladimir Putin. They also have the potential to unnerve investors in energy markets.
US senior administration officials said they want to leave Kyiv – and the incoming Trump administration – with the strongest possible hand for potential negotiations. Those officials expressed hope that the next administration would maintain and enforce the sanctions, despite previous skepticism from some Trump officials about the effectiveness of such measures.
The new sanctions against “the Kremlin’s largest and most important source of revenue” hit hundreds of targets, including two of Russia’s largest oil companies: Public Joint Stock Company Gazprom Neft and Surgutneftegas.
The sanctions also target nearly 200 oil-carrying vessels, many of which are accused of being part of the so-called “shadow fleet” that works to evade sanctions, as well as oil traders and energy officials. They also go after Russia’s liquified natural gas (LNG) production and export.
“We expect our actions to cost Russia upwards of billions of dollars per month,” a senior administration official said.
The sanctions, introduced in coordination with the United Kingdom, are part of the administration’s broader approach to bolstering Kyiv. The Biden administration on Thursday announced its final tranche of military aid for Ukraine, valued at around $500 million. The Pentagon said Friday that there will be “just under $4 billion” in funding from the Presidential Drawdown Authority that will roll over to the incoming Trump administration for funding aid to Ukraine.
“These sanctions, in addition to the actions we’ve taken over the last several weeks, help put Ukraine in a position in which they have the ability to work with the incoming administration to try and find a just peace,” a second senior administration official said.
On Thursday, Trump reiterated his desire to end the war in Ukraine, saying that Putin “wants to meet, and we’re setting it up.”
“President Putin wants to meet — he’s said that even publicly — and we have to get that war over with. That’s a bloody mess,” he said.
The first senior administration official acknowledged “it’s entirely up to” the Trump team “to determine whether, when and on what terms they might lift any sanctions we’ve put into place.”
Moreover, the strength of the sanctions will depend largely on enforcement, with one official noting that “we have to match every circumvention with a countermeasure, and that will take political will.”
“Russia is going to make every effort to circumvent these sanctions. It’s inevitable,” the first official said.
“But circumvention is not costless. Russia has had a constant need to adapt and reorient its supply chains. That creates inefficiency. It creates uncertainty. It creates complexity. So our sanctions are like pounds of sand into the gears of Russia’s war machine,” they said.
Friday’s measures do not have secondary sanctions against specific countries, officials said. China and India have been top importers of Russian oil throughout the war in Ukraine.
Officials argued that they waited until the waning days of the administration to impose the sanctions in part because of the state of the global oil market and the potential impact on the US economy.
Russia’s invasion of Ukraine in early 2022 sparked fears of major supply disruptions from one of the world’s leading producers. Oil prices spiked to as high as $130 a barrel in March 2022, contributing to the inflation crisis across the US economy and pushing gasoline prices to all-time highs.
“During much of this war, global supplies were tight and at risk of falling short of demand,” the first senior administration official explained, noting that would have likely increased revenues to Russia “while raising prices at the gas pump for families in the United States and across the world.”
Now, the official said, both oil markets and the US economy “are in a fundamentally better place.”
The United States is producing more oil than any nation in world history, forcing OPEC to dial back supply. Oil prices have been relatively subdued, in part because of record-shattering US production.
Still, oil prices climbed sharply Friday morning, even before the official sanctions announcement, with some traders blaming rumored sanctions.
US crude jumped 4% to nearly $77 a barrel. Brent crude, the world benchmark, advanced 3.7% to about $80 a barrel.
CNN’s Michael Conte and Oren Liebermann contributed reporting.
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