BRUSSELS — Donald Trump’s surprise move to sanction Russia’s largest oil companies won’t paralyze Vladimir Putin’s war machine — but it will help the EU kick Russian oil out of the bloc for good.

On Wednesday, Trump announced “tremendous” new sanctions targeting Russia’s Lukoil and its state-owned Rosneft, marking the first U.S. sanctions on Moscow since he took office. 

The details of the new measures are still being worked out. But in theory, they threaten to force the two firms to sell their assets and end their remaining oil pipeline supplies to Europe.

“This is a significant step,” said Kimberly Donovan, a sanctions expert at the Atlantic Council think tank, “and it is going to force … European countries and companies that have been continuing to import energy to reconsider those transactions” by Nov. 21, when the sanctions kick in.

The announcement comes a month after Trump lambasted Europe for “inexcusably” continuing to buy energy from Russia, which in total provides a quarter of income for the Kremlin’s war chest. 

At the time, he also issued an ultimatum to Europe, writing: “I am ready to do major Sanctions on Russia when all NATO Nations have agreed, and started, to do the same thing, and when all NATO Nations STOP BUYING OIL FROM RUSSIA.”

Now, he’s followed through.

Damage, not destroy

For Moscow, the new sanctions will mean immediate pain, but are unlikely to curtail its war effort in Ukraine.

Rosneft and Lukoil account for around two-thirds of the 4.4 million barrels of crude Russia exports each day, according to David Fyfe, chief economist at the Argus media consultancy.

The sanctions threaten to take out “half” of those supplies, he said, given the measures prevent the two firms from selling their cargoes in dollars, the currency used almost exclusively for trading crude internationally.

For Lukoil in particular, the sanctions “will hurt significantly,” said one former executive at the company, who was granted anonymity to speak candidly about sensitive matters. The firm will likely have to sell its stakes in overseas projects from Egypt to Iraq, the person said, hitting up to 20 percent of its revenue.

But the majority of Chinese and Indian buyers, Russia’s two largest oil trading partners, are likely to continue importing from Moscow, said Homayoun Falakshahi, head of crude oil analysis at the Kpler commodities firm, given its cheaper prices and limited alternatives in the case of China.

After an initial period of hiatus, “most buyers would go back into buying,” he said, once they have found workarounds including purchasing cargoes via companies that obscure their Russian ownership.

“This will complicate exports and trade,” said Vladimir Milov, a former Russian deputy energy minister-turned-Putin critic. But “these companies … already have alternative work schemes in place, so there will be damage but it’ll be limited.”

On Thursday, Putin himself admitted the new sanctions were “serious,” while blasting the move as an “unfriendly act that does nothing to strengthen Russian-American relations.”

Lingering presence

But one place where the measures are likelier to have a clear effect is Europe.

Since Moscow launched its full-scale invasion of Ukraine more than three years ago, the EU has strained to end its reliance on Russia for energy. 

Brussels has slapped an embargo on Russian crude, fuel and coal entering the bloc by sea; and has whittled down the Kremlin’s share in the EU’s gas market from 45 to 13 percent. (It is now finalizing a bill that would bring that down to zero.) 

Rosneft, which once owned refineries and controlled oil flows to Germany, has been largely dispossessed in Europe after Berlin took control of its local subsidiary in late 2022. 

“We assume that the measures taken by the United States … are not intended to target Rosneft’s subsidiaries in Germany, which are held in trust by the German states,” said a spokesperson for the German economy ministry.

On Thursday, the EU also tightened its sanctions against the Kremlin-controlled company.

But it’s a different story with Lukoil. Russia’s largest private oil firm runs hundreds of gas stations across the EU, including around 200 in Belgium; operates giant refineries in Romania and Bulgaria; and retains a 45 percent share of a fuel processing plant in the Netherlands.

It also supplies oil to Hungary and Slovakia, which still rely on Moscow for between 86 and 100 percent of their imports. Exploiting a sanctions opt-out, the two countries have stubbornly resisted ditching Moscow — despite intense pressure from the EU.

So far, Brussels has repeatedly failed to target the company despite being linked to sanctions circumvention in the bloc.

Neither Rosneft nor Lukoil responded to POLITICO’s requests for comment.

Out of Lukoil

Now things are set to change. 

The U.S. Treasury has said it “may” impose sanctions on anyone working with the Russian firms, meaning no bank will now handle payments for them in Europe, said Donovan, the sanctions expert.

“It’s going to be a huge signal to [European banks and businesses] that they really need to step away from this, or otherwise they’re exposing themselves to sanctions,” she said.

On Thursday, the European Commission said it too was mulling its own transaction ban against Lukoil.

For Hungary and Slovakia, in particular, the new sanctions are sparking anxieties that oil flows could be cut off entirely.

If enforced, it “would lead to the stopping of imports,” acknowledged one Slovak official, also granted anonymity to speak frankly, saying the government will “most likely” seek an exemption from Washington. Hungary’s foreign ministry didn’t respond to a request for comment.

In fact, the impacts of the measures are already starting to be seen. Finnish energy firm Neste on Thursday suspended fuel deliveries to Lukoil subsidiary Teboil after the U.S. and U.K. sanctions against the firm. 

Romania’s state secretary for energy, Cristian Bușoi, told POLITICO that Lukoil will now have “an obligation” to sell its south-central Petrotel refinery before next month’s deadline. “We would be happy not to have Lukoil anymore,” he added.

The Dutch government, too, now sees a quick sale of Lukoil’s stake in its southwestern Zeeland refinery as “the most likely scenario,” according to a person familiar with the matter.

Bulgaria’s eastern Neftochim refinery will also “have to stop operation on Nov. 21” unless it is sold, added Martin Vladimirov, a senior energy analyst at the Sofia-based Center for the Study of Democracy think tank. The Bulgarian energy ministry declined to comment.

“They’ll have to be sold,” echoed the former Lukoil executive.

For the company, it will be “catastrophic,” the person added.

Koen Verhelst contributed to this report.