US, UK unveil widespread sanctions against Russia's energy sector

The United States and Britain on Friday announced sanctions against Russia's energy sector, including oil giant Gazprom Neft, just days before outgoing President Joe Biden leaves office.

The US Treasury Department said it was designating more than 180 ships as well as Russian oil majors Gazprom Neft and Surgutneftegas, fulfilling "the G7 commitment to reduce Russian revenues from energy."

At the same time, the UK government announced sanctions against the two companies, saying their profits were "lining (Russian President Vladimir) Putin's war chest and facilitating the war" in Ukraine.

"Taking on Russian oil companies will drain Russia's war chest –- and every ruble we take from Putin's hands helps save Ukrainian lives," UK Foreign Secretary David Lammy said in a statement.

Gazprom Neft slammed the sanctions as "baseless" and "illegitimate," Russian state news agencies reported.

"Gazprom Neft considers the decision to include its assets on the sanctions list as baseless, illegitimate and contrary to the principles of free competition," Russian state news agencies quoted a company representative as saying.

Oil prices rose on the news, with a barrel of Brent North Sea crude oil for delivery in March rising 2.5 percent, to $78.87, at around 11:40 am in Washington (1640 GMT).

'Sweeping action'

Asked earlier Friday about possible fresh sanctions against Russia, Kremlin spokesman Dmitry Peskov said the Biden administration was trying "to leave (incoming US President Donald) Trump as heavy a legacy as possible."

In total, the United States is sanctioning 183 oil-carrying vessels, Russian oil traders and oilfield providers, the two Russian oil majors and more than two dozen of their subsidiaries, according to the Treasury Department.

"Today, the United States imposed the most significant sanctions yet on Russia's energy sector, by far the largest source of revenue for Putin's war," Daleep Singh, the Biden administration's deputy national security advisor for international economics, said in a statement.

"These sanctions will hit hard across every key node of Russia's oil production and distribution chain," he added.

Senior administration officials told reporters that the measures were designed to give the United States additional leverage to help broker a "just peace" between Ukraine and Russia.

Ukrainian President Volodymyr Zelensky on Friday praised the United States for introducing the sanctions.

"These measures deliver a significant blow to the financial foundation of Russia's war machine by disrupting its entire supply chain," he wrote in a post on the social media platform X.

Strong economy influenced timing

Friday's announcement comes just 10 days before Biden is due to step down, and puts President-elect Trump in something of an awkward position given his stated desire to end the Ukraine war on day one of his presidency.

Asked about the timing of the decision, National Security Council spokesperson John Kirby told reporters that oil markets were now in a "fundamentally" better place than they had been in the aftermath of Russia's invasion of Ukraine in 2022, and the US economy was also faring better.

"We believe the moment was ripe right now to adjust our strategy," he said.

The US State Department announced it was also taking action against Russia's energy sector, "sanctioning nearly 80 entities and individuals, including those engaged in the active production and export of liquefied natural gas (LNG) from Russia."

Among those it designated were people involved in Russia's metals and mining sector, "and senior officials of State Atomic Energy Corporation Rosatom."

Friday's sanctions are the latest in a long line of announcements by the US and its G7 allies targeting the Russian economy -- including its lucrative oil and gas sector -- over its 2022 invasion of Ukraine.

The United States and its allies imposed a price cap on Russian oil in a bid to limit petroleum sales and revenues without curbing exports so sharply that it would cause global oil prices to soar.

To skirt the measures targeting its oil sector, Russia has resorted to using a so-called "shadow fleet" of often ageing vessels that operate under dubious ownership or without proper insurance.