U.S., RUSSIA SANCTIONS: WOULDN'T IMPACT

S&P GLOBAL - October 23, 2025 - Russian President Vladimir Putin on Oct. 23 shrugged off new, direct US sanctions on the country's top oil companies, saying "our energy leaders feel pretty confident" as analysts predicted significant international ramifications.

Speaking to journalists, Putin said he "hoped" the latest US sanctions on Russia's oil sector -- targeting Rosneft and Lukoil directly -- wouldn't unduly impact the market, but warned removing Russian oil was likely to push up prices, saying he had "discussed this with my American colleagues."

As for Russia itself, "what's important is we feel confident, stable, and despite certain losses -- which there of course will be due to various circumstances -- all the same, our energy leaders feel rather confident," Putin said in footage carried by Russian media.

There was no immediate reaction from the two Russian companies beyond Lukoil announcing a postponement of a planned board meeting due to "current circumstances."

Attention turned, however, to the numerous international projects outside Russia in which the two Russian companies are involved, spanning Kazakhstan, Azerbaijan, Nigeria and Egypt among other locations.

None of the major global oil companies have commented directly on the details of the sanctions.

A Shell spokesperson said: "Shell complies with all relevant laws, sanctions and regulations of the countries in which we operate."

The Oct. 22 sanctions announcement from the US Treasury granted specific exemptions for two major assets where Chevron and ExxonMobil are partners: the giant Tengiz Field in Kazakhstan and the linked Caspian Pipeline Consortium export route.

But notwithstanding an interval for implementation, the announcement is expected to trigger a lobbying effort by global oil companies to exempt overseas projects where one or another of the Russian companies has a stake. Such stakes range from 30% in the case of Rosneft's share in Egypt's Zohr gas field to just 3.75% in the case of Lukoil's stake in Nigeria's planned Bonga Southwest project.

Russia has a notable presence in the Caspian countries to its south, with Lukoil holding a 19.9% stake in the BP-led Shah Deniz gas project, a 5% stake in Kazakhstan's Tengiz and a 13.5% stake in Kazakhstan's Karachaganak Field -- the latter relies on a gas processing plant on Russian territory at Orenburg.

"The US sanctions represent a major increase in pressure on Russia, reflecting Trump's frustration with Russia's intransigence" over the Russia-Ukraine war, Andrew Neff, director of national oil company research at S&P Global Commodity Insights, said. "The Treasury sanctions effectively block Russia's two largest oil producers from doing business in US dollars, as well as threaten secondary sanctions on any companies that do business with Rosneft or Lukoil. This makes both companies toxic for their partners, both for upstream projects in Russia, but particularly overseas," he said.

Independent Russia analyst George Voloshin agreed there would be ramifications for several global oil companies, adding there was no sign of BP managing a clean break from the 19.75% stake in Rosneft that it tried to exit after the start of the Russia-Ukraine war, but which lies effectively frozen, with the Russian government having veto powers over any sale or dividend payment.

"Sanctions significantly complicate life for partner integrated oil companies... and they will be actively seeking exemptions as required," Voloshin said. "Since Lukoil and Rosneft hold ownership stakes in international joint ventures -- even minority ones -- the IOC partners must perform rigorous due diligence to ensure no sanctioned funds, assets or services are being exchanged with the blocked Russian entities. Any transaction involving the JV could expose the IOCs to sanctions liability."

In the downstream oil market, Bulgaria's prime minister said Oct. 23 that the country would be forced to consider the fate of its Lukoil-owned Burgas refinery before the US sanctions deadline. "Until Nov. 21 it is possible to do all the necessary transactions and transfers," he said, without providing further detail.

Russia legacy

As for BP's hopes of selling its Rosneft stake and making a clean break, "since Rosneft is now under full blocking sanctions, any party acquiring the stake would immediately inherit direct sanctions exposure. Any national oil company (except possibly those from China or India, which would still risk secondary sanctions) would be unable to find a bank, insurer, or lawyer willing to process the transaction," Voloshin said. "BP will continue to hold a non-monetizable asset."

The latest US sanctions on Oct. 22 came after President Donald Trump met Ukrainian President Volodymyr Zelensky in the White House on Oct. 17 and a planned meeting between Trump and Putin in Budapest was canceled. It also follows the UK announcing sanctions on Rosneft and Lukoil on Oct. 15, also sanctioning 44 oil tankers.

The EU has also approved its 19th sanctions package against Russia in recent days, also targeting selected buyers of Russian oil around the world. An Oct. 23 statement from the European Commission outlined sweeping measures clamping down on major Russian oil traders, including Litasco Middle East DMCC, a subsidiary of Lukoil, and Chinaoil, the trading arm of Petrochina.

The EC confirmed a decision to impose a full transaction ban on Rosneft and Gazprom Neft, which were previously afforded energy-related exemptions.

The two Russian companies export 3.1 million b/d of oil, according to the UK government. Rosneft alone accounts for nearly half of all Russian oil production and approximately 6% of global output, according to the government.

Urals crude prices were seen as getting some boost on Oct. 23, with Urals sold on a CIF Rotterdam assessed by Platts $3.32/b higher on the day's session at $56.80/b. Platts is part of Commodity Insights.

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