Russia, the world’s second-largest oil exporter, is considering how to respond to US sanctions on oil majors Rosneft and Lukoil, as well as possible cuts in sales to its biggest buyer, India.

Russian President Vladimir Putin, who started the war in Ukraine in 2022, has been in talks with US President Donald Trump for months about a possible solution to end the war, but no progress has been made so far.

Washington’s sanctions

On October 22, the US Treasury Department’s Office of Foreign Assets Control (OFAC) imposed sanctions on Russian oil companies Rosneft and Lukoil, as well as a number of their subsidiaries, calling on Moscow to immediately agree to a ceasefire in Ukraine.

The two companies account for about half of Russia’s oil production and more than 5% of global crude production.

In January, the US Treasury Department had already imposed sanctions on Russia’s energy sector, including oil giants Gazprom Neft and Surgutneftegaz, but the measures have not effectively halted Russian oil exports.

The United States has also imposed sanctions on the so-called “shadow fleet”, which handles much of Russia’s oil exports, while some US lawmakers are calling for even tougher measures.

The new sanctions target more than 180 ships as well as dozens of oil traders, mining service providers, insurance companies and energy officials.

India’s reaction

According to Reuters, Indian refiners, including the largest buyer, Reliance Industries, plan to reduce or even stop imports of Russian oil.

India is under increasing pressure from the United States to curb its purchases as trade negotiations between New Delhi and Washington get underway.

According to International Energy Agency (IEA) data, India bought 1.9 million barrels per day in the first nine months of 2025, a quantity corresponding to 40% of total Russian oil exports.

What does this mean for Russia?

The tightening of sanctions is expected to force Moscow to offer even greater discounts to buyers in order to maintain its exports.

Oil and gas revenues account for up to a quarter of Russia’s state budget and are the main source of funding for the four-year-old military campaign in Ukraine.

However, mining taxes are paid at the source, i.e. at the field of production, so the sanctions will only really hurt government revenues if Russia is forced to reduce its production.

How could Russia respond?

Earlier this month, the Kremlin hit back at Donald Trump’s warnings that the Russian economy was in danger of collapsing, arguing that the country has significant reserves and is strong enough to allow Vladimir Putin to achieve his goals.

One of Moscow’s options would be to cut off crude oil exports, but that would hurt allies like China and result in a reduction in Moscow’s revenue, the result the West is seeking.

Other options being considered are the cessation of exports of strategic raw materials, such as enriched uranium, palladium or titanium, which would however have negative consequences for the Russian economy itself.

Alternatively, Russia could strengthen its cooperation with China in the field of rare earths. According to the US Geological Survey (USGS), Russia has the world’s fifth largest reserves of rare earths, and closer cooperation with the industry’s dominant player, China, could undermine US efforts to limit Chinese dominance of the market for these critical minerals.

Russia also has some leverage over Western oil companies, as it controls exports through the Black Sea via the Caspian Pipeline Consortium, which carries mostly crude oil from Kazakhstan.

This oil is drawn from a joint venture in which the American companies Chevron and ExxonMobil participate.

However, curbing these exports would severely hurt Kazakhstan, with which Russia maintains close economic and defense ties.

What about OPEC+?

Russia is a leading member of OPEC+, the expanded arrangement that unites OPEC countries with their non-OPEC allies, and together they account for about 50% of global oil production.

In recent months, OPEC+ has begun to ease production curbs to regain market share. However, any decline in Russian exports could hamper the agency’s efforts to agree new production increases.

What about China?

Along with India, China is one of the largest buyers of Russian crude. The two countries had declared a “borderless partnership” in February 2022, when Putin visited Beijing shortly before Russia invaded Ukraine, sparking Europe’s deadliest war since World War II.

Russia accounts for about 20% of China’s crude oil imports. Today, the Chinese Foreign Ministry reiterated its position against unilateral sanctions, commenting on the US measures imposed on Rosneft and Lukoil.