Nato Secretary-General Mark Rutte (left) and US President Donald Trump in the Oval Office on Thursday to announce fresh sanctions on Russia. Photo / Getty Images
The White House imposed new sanctions on Russia’s energy sector after Donald Trump cancelled a peace meeting with Vladimir Putin.
On Thursday, the US President announced the US would target two of Russia’s biggest oil companies, Rosneft and Lukoil, to degrade the Kremlin’s ability to fund its war with oil sales.
The European Union also announced it would impose its own sanctions on Russia, including a ban on the import of liquefied natural gas. The natural gas ban will phase out rather than immediately halt imports.
The package also institutes new travel restrictions on Russian diplomats in the EU’s Schengen Zone and prohibits another 117 ships in Russia’s shadow fleet from accessing EU ports.
The US sanctions mark the latest in a significant shift in Trump’s relationship with Putin, which soured on Tuesday after he refused to accept America’s terms for a ceasefire in Ukraine.
“Look, these are tremendous sanctions,” Trump told reporters in the Oval Office. “These are very big ones that are against their two big oil companies, and we hope that they won’t be on for long. We hope that the war will be settled.”
He said the sanctions were designed to push Putin back to the negotiating table.
“Hopefully he’ll become reasonable, and hopefully [Ukraine President Volodomyr] Zelenskyy will be reasonable,” he said. “You know, it takes two to tango, as I say, and we’ll find out.”
The initial measures on Russian oil are unlikely to shift the dial for Russia’s economy.
However, oil prices jumped by almost 3% – more than US$2 ($3.50) per barrel – after the announcement, which also included a threat to impose “secondary” sanctions on foreign buyers of Russian oil.
Mark Rutte, the head of Nato, said the move was about “changing the calculus” with more pressure on the Kremlin.
He joined Trump in the White House after flying to Washington DC to deliver a 12-point peace plan drawn up by Europe.
Britain’s Foreign Secretary Yvette Cooper was quick to welcome the sanctions, which followed a similar move by her Parliament last week.
“Strongly welcome this important package of sanctions from the US,” she said. “We must choke off the oil and gas revenues helping to fuel Putin’s illegal war.”
Last Friday, Trump announced a plan to meet with Putin in Hungary, triggering a flurry of diplomatic activity. But the plans were shelved after Russia refused to end the war along the current front lines.
In the Oval Office on Thursday, Trump confirmed the summit had been “cancelled”.
“Every time I speak with Vladimir, I have good conversations, and then they don’t go anywhere. They just don’t go anywhere,” Trump said. “It’s time to make a deal. A lot of people are dying.”
US Secretary of State Marco Rubio said the US was still interested in meeting with Russia.
Kremlin spokesman Dmitry Peskov told reporters plans for a summit were still in the process of being arranged.
“The dates haven’t been set yet, but thorough preparation is needed before then, and that takes time,” Peskov said.
After the cancellation of the summit, Russia launched 400 missiles and drones on Ukraine, killing seven people, including two children.
Putin also carried out nuclear missile tests and large-scale drills in an apparent show of strength.
Meanwhile, Trump defended his decision not to provide Ukraine with Tomahawk missiles because it would take too long to train the Ukrainian military to use them.
The President said it would take “minimal six months” or even a year to teach the long-range missile system to Ukrainians, adding there is a “tremendous learning curve”.
The Trump administration had previously considered the possibility of providing the weapons to Ukraine to help stop the war.
But Trump shut down the option after speaking with Putin, suggesting the US needed to preserve its supply of Tomahawk missiles.
“It’s a very powerful weapon, very accurate weapon, and maybe that’s what makes it so complex,” he told reporters in the Oval Office.
“But it will take a year. It takes a year of intense training to learn how to use it, and we know how to use it, and we’re not going to be teaching other people. It will be too far out into the future.”
Rutte said the US President was “completely right” to withhold the missiles from Ukraine and even with training, like any other weapon, they would not “change the whole war”.
“Let’s never think that one specific weapons system will change the whole war,” Rutte said in an interview with CNN.
“So it is not that if you decide today, that Ukrainians can use them tomorrow.”
Before his summit with Rutte, reports surfaced that the Trump administration had loosened its rules for Ukraine firing existing long-range weapons such as British Storm Shadows.
Trump later dismissed the reports as “fake news”.
The sanctions mean any assets held by the companies in the US will be frozen. Banks or people who deal with the two companies and their subsidiaries could also face sanctions.
Craig Kennedy, associate at Harvard’s Davis Centre for Russian and Eurasian Studies, and Merrill Lynch, former Bank of America vice-president, said the impact of the sanctions would depend primarily on the extent to which the US follows through with its threat to impose secondary sanctions on those dealing with Rosneft and Lukoil.
The US Treasury said transactions with Rosneft and Lukoil “may risk the imposition of secondary sanctions on participating foreign financial institutions”.
This would potentially mean India and China, who are the main buyers of Russian oil.
Kennedy said: “It’s not going to be seismic, this is going to be incremental. And it really comes down to whether they start putting calls through to people in India and China saying you shouldn’t be buying this stuff.”
The measures threaten about two million barrels of Russian oil exports per day, or around a third of its total export volumes.
Imposing secondary sanctions on these exports would risk driving up oil prices significantly, as the sanctions hit global supply, Kennedy said.
“If they really want to be aggressive, it could be quite impactful on the oil market, but the blowback to us might be worse than the impact on Russia,” he said.
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