Trump weighs an economic assault on the ‘one big, juicy target left’ in Russia: Its oil

The U.S. is weighing an all-out economic assault on the lifeblood of Russia’s economy, its energy exports, in what analysts say would be a dramatic, potentially high-risk move to influence the Kremlin’s decision-making and force an end to its war in Ukraine.

With strong backing from a bipartisan coalition in Congress, President Trump has floated massive financial penalties against Russia’s energy sector and any country that does business with it.

For the president, it appears to be something of a last resort, a step he will take only if Russian President Vladimir Putin refuses to sign on to a deal halting hostilities in Ukraine. The president told NBC News this week that he is willing to target Russia’s oil because he is angry with Mr. Putin for standing in the way of a ceasefire.

“I was p—-ed off about it. But if a deal isn’t made, and if I think it was Russia’s fault, I’m going to put secondary sanctions on Russia,” he said.

“Anybody buying oil from Russia will not be able to sell their product, any product, not just oil, into the United States,” Mr. Trump said.

He laid out a plan for stiff tariffs against Russian oil exports and penalties on all imports from countries that buy it, presumably including major global players China and India.

The approach, analysts say, could follow one of two paths.

The more traditional route would involve putting Russian energy companies on the Treasury’s Specially Designated Nationals and Blocked Persons, or SDN, list.

In that case, U.S. individuals and companies would be prohibited from doing business with those firms. Anyone abroad who does business with them would not have access to the American banking system.

The other avenue would be a more novel approach: putting stiff, secondary tariffs on goods from any country buying Russian oil, which would be crushing for nations that export goods into the lucrative American market — especially those about to pay reciprocal tariffs under the program Mr. Trump announced Wednesday.

In either case, it would represent the most aggressive American economic move against Russia and could have major geopolitical implications. For example, how would India react to such tariffs? The U.S. desperately wants India as an ally to help counter China’s growing influence over the Indo-Pacific region.

Until now, the U.S. has been reluctant to use its full economic leverage against Russian energy exports because of fear that such actions could destabilize global markets and lead to surges in fuel prices worldwide.

But hardly anything else is left for the U.S. and its allies to target through sanctions. Now may be the moment to employ what some specialists describe as the “nuclear option” against Mr. Putin’s economy, which is deeply dependent on revenue from oil sales.

“The one thing they can do is attack Russia’s current energy sales. That is the one big, juicy target that’s left that hasn’t been crippled by sanctions. If you want to use economic weapons to pressure Russia, you go after the energy sector,” said Emily Kilcrease, senior fellow and director of the Energy, Economics, and Security Program at the Center for a New American Security.

“We’re clearly in this position where we’ve tried a more limited, clever approach, and it hasn’t worked,” she said in an interview. “We’re at a point now where if you really do want to bring the [Ukraine] conflict to a close, you need to ramp up pressure on Russia pretty significantly.”

The more clever approach employed by the U.S. and Europe over the past two years has been implementing a price cap on Russian oil. Since December 2022, that cap has been set at $60 per barrel of Russian crude oil. Western companies providing maritime services for transporting that oil, such as insurance, do so only if the oil is sold at or below that $60 per barrel cap.

The approach worked on dual tracks: It limited Russia’s profits from energy exports and kept the global oil supply relatively stable, preventing unexpected price surges or dangerous drops in supply.

It has been somewhat successful, but Russia is still reaping huge profits. It received about $192 billion in revenue from oil and crude oil exports last year, according to data from the International Energy Agency.

The Oxford Institute for Energy Studies estimated last year that Russia gets 30% to 50% of its total federal budget revenue from the oil and gas industry.

From December 2022, when the price cap was implemented, through February of this year, China bought about 47% of Russia’s crude oil exports, followed by India at 38%, according to information compiled by the Centre for Research on Energy and Clean Air.

Russia also has reaped greater profits through its “shadow fleet,” ships without proper insurance or identification transporting illicit oil at prices outside the cap.

Two days after Mr. Trump threatened new tariffs on Russian oil, a bipartisan coalition of 50 senators proposed a whopping 500% tariff on imported goods from countries that buy Russian oil, gas, uranium and other products.

The leaders of that effort, Sen. Lindsey Graham, South Carolina Republican, and Sen. Richard Blumenthal, Connecticut Democrat, acknowledged the significance of those tariffs.

“They are hard hitting for a reason,” the two senators said in a statement. “The dominating view in the United States Senate is that Russia is the aggressor, and that this horrific war and Putin’s aggression must end now and be deterred in the future.”

Asked about the potential impact of such secondary tariffs on China, Chinese Foreign Ministry spokesperson Guo Jiakun brushed it off.

“China’s position on the Ukraine crisis is consistent and clear. We always believe that dialogue and negotiation are the only viable solution to the Ukraine crisis. Cooperation between China and Russia does not target any third party and will not be affected by any factor from any third party,” he said at a press conference Monday.

Despite the delicate geopolitics and high stakes, there seems to be no real way to hit the Russian energy sector without targeting buyers such as China and India.

“You’d have to be willing, if you’re really trying to bring down the hammer on Russia, you would have to think about how to deal with the China angle and whether we’d be willing to use those economic tools against China,” Ms. Kilcrease said. “The attack on Russia’s energy sector will be less successful if we don’t go after the buyers of that energy.”