Russian oil giant Lukoil agreed to sell its foreign assets to an American investment firm Thursday in a major indication President Donald Trump’s sanctions against Moscow are hitting home.
The proposed sale—valued by some estimates around $22 billion—comes as Lukoil faces U.S. blocking sanctions and divestment conditions, and could deliver a hugely damaging economic blow to the Kremlin.
Lukoil, the country’s largest non-state enterprise in terms of revenue, stood out among Russian energy giants for its international reach. Unlike state-controlled companies such as Rosneft, Lukoil invested overseas, developing refineries in Europe, upstream assets in the Middle East and gas stations in several continents: it owns around 200 such stations in the U.S., spread across New Jersey, New York and Pennsylvania. For decades, this gave Moscow influence abroad and protected Lukoil, to an extent, from domestic shocks at home.
That started to unravel when the U.S. and its Western allies began imposing sanctions on Russia after it invaded Ukraine in February 2022. In October 2025, the Trump administration imposed targeted sanctions on Rosneft and Lukoil.
The move has worked. Here’s why—and how damaging it is for Moscow:
How Trump Sanctions Hit Their Target
The U.S. announced sanctions in October on Lukoil and Rosneft in an effort to tighten financial pressure over Russia’s war in Ukraine. Britain followed with its own restrictions, targeting both companies and dozens of so-called shadow fleet tankers accused of helping Russia evade existing limits on oil exports.
The first major Russia-related sanctions action of Trump’s second term, they “blocked” all property and interests of Lukoil that are in the U.S. or controlled by Americans—essentially meaning they were frozen and could not be used or transferred. The sanctions applied not just to the parent company but also to many of its subsidiaries and affiliates, extending their impact.
Treasury Secretary Scott Bessent described Lukoil in October as part of “the Kremlin’s war machine.” He added: “Now is the time to stop the killing and for an immediate ceasefire.”
When asked about the sanctions, Trump, who has been criticized for a changing stance on Russia and Putin, said: “I just felt it was time. We waited a long time. I thought that we’d go long before the Middle East.”
Explaining the move, the Treasury Department said in a statement: The “actions increase pressure on Russia’s energy sector and degrade the Kremlin’s ability to raise revenue for its war machine and support its weakened economy.”
Putin ally Dmitry Medvedev lashed out immediately at the sanctions, writing on X in October: “The decisions taken are an act of war against Russia. And now Trump is fully in solidarity with crazy Europe.”
What It Means For Russia—Now and After the War
Lukoil’s sale of its foreign assets is a significant blow to Russia’s tax revenues at a time when the Kremlin can least afford it.
Unlike state-controlled energy giants, Lukoil’s overseas operations generated steady profits that flowed back to Russia through dividends and corporate taxes. Forcing those assets out of Russian ownership sharply reduces the pool of revenue Moscow can access beyond its borders.
Last week, Reuters reported that Russia’s federal budget proceeds from taxes on oil and gas were forecast to fall by 46 percent this month, compared to January last year. Revenue is expected to fall to an estimated 420 billion rubles ($5.41 billion) this month, which would be the lowest return since August 2020, at the height of the COVID pandemic.
Russia’s federal budget remains heavily dependent on oil and gas revenues—roughly a third of total receipts in recent years—and that dependency has become more acute as wartime spending has surged.
However, the federal budget is forecast to retrieve just 8.957 trillion rubles from oil and gas sales in total this year, Reuters reports. The total budget revenues for the year are predicted to be 40.283 trillion rubles.
In wartime, Russia has compensated with high defense spending, taxes, and heavy borrowing. However, when the war eventually ends, the country will face huge rebuilding costs and pressure to address living standards.
Sanctions are not just tightening the wartime squeeze. They are sending a damaging signal about the durability of Russian corporate power abroad and narrowing Russia’s postwar fiscal options.
What Is the Status of the Russia-Ukraine Peace Negotiations?
A diplomatic push by the Trump administration to end the war in Ukraine has generated momentum, U.S. and European officials say, but it has yet to produce a breakthrough on the central issue dividing the sides: the future of Russian-occupied Ukrainian territory and other land claims being made by Moscow.
Analysts say Putin sees little incentive to compromise, even as his forces face mounting strain along the roughly 600-mile front line. In their assessment, the Kremlin believes time is on its side—betting that Western political unity will fray, military aid to Kyiv will diminish, and Ukraine’s ability to sustain resistance will erode under prolonged pressure.
To maintain battlefield momentum, Russia has intensified efforts to replenish its ranks, offering cash incentives, recruiting from prisons, and drawing in foreign nationals to bolster its forces.
What Happens Next
Ukrainian President Volodymyr Zelensky said late Monday that the next round of talks involving the United States and Russia was tentatively scheduled for February 1, but that “it would be good if this meeting could be accelerated.”
He also renewed calls for tougher sanctions on Moscow, arguing that additional economic pressure was needed to force the Kremlin toward meaningful concessions. The Lukoil sale is a firm indicator he is right.
