“Trump Administration Closes In on Hard-Hitting Sanctions on Russia”

Yves here. We sometimes feature posts by Simon Watkins, who is a neocon’s neocon. Readers find it instructive to pick through his various rants proclamations about the West’s favorite enemies: Iran, China, and in today’s offering, Russia.

You’ll see that Watkins appears not to have gotten the memo that Ukraine’s attack on bombers that are part of Russia’s nuclear triad, which in Russia and as well as US nuclear doctrine, is tantamount to a nuclear first strike, has cooled Trump Administration enthusiasm for Ukraine’s campaign. It’s become clear that Ukraine reserves the right to take action that puts its sponsors at risk. The US might tolerate that for Israel, which has a choke chain on Congress. But Ukraine, despite all of the press fawning, does not approach that status.

As many who follow the Ukraine conflict closely will likely have inferred, Trump is having some success in getting Lindsay Graham and Richard Blumenthal to accept their “bone crushing sanctions” being watered down to something more cosmetic. These killer sanctions would be secondary sanctions, as in targeting buyers of Russian oil and gas, above all China and India. Alexander Mercouris has gone through the timeline of Trump remarks and argues it was his chat Xi Jinpeng that finally persuaded Trump to start arm-twisting the two hyper-belligerent Senators. Politico also described how these sanctions would do plenty of collateral damage, even with a carveout for Ukraine allies.

Admittedly, Watkins does signal a climb-down from the extreme sanctions proposals. This implementation feature in the post below seems noteworthy:

In Europe’s case, according to a senior source in the E.U.’s energy security complex exclusively spoken to by OilPrice.com recently, further measures are going to be taken to tighten up the monitoring of the Russian System for Transfer of Financial Messages (SPFS), which was established to act as an alternative to the international SWIFT payment system. In its earlier 16th sanctions package, the E.U. imposed a ban on all SPFS transactions that occur outside Russia itself and imposed multiple sanctions on neighbouring Belarus as a broader signal of its intentions to allies and potential allies of Russia.

Do readers have any more information about what the earlier and planned EU monitoring of SPFS amounts to?

By Simon Watkins, a former senior FX trader and salesman, financial journalist, and best-selling author. He was Head of Forex Institutional Sales and Trading for Credit Lyonnais, and later Director of Forex at Bank of Montreal. He was then Head of Weekly Publications and Chief Writer for Business Monitor International, Head of Fuel Oil Products for Platts, and Global Managing Editor of Research for Renaissance Capital in Moscow. Originally published at OilPrice

• Trump prepares sweeping new sanctions on Russia.
• The sanctions may include targeting Moscow’s shadow oil fleet, LNG projects, and energy-linked firms.
• The U.S. ‘Sanctioning Russia Act of 2025’ echoes EU efforts, proposing both primary and secondary sanctions to penalize global entities aiding Russian trade.

Whatever other qualities U.S. President Donald Trump may or may not have, a long and patient attention span is not reputed to be one of them. During his presidential campaign in 2023 and 2024, he said on multiple occasions that he would end the war in Ukraine either within 24 hours of his return to the White House or even sooner than that.

That has not happened, but he has expended considerable effort along with many senior colleagues to do just, that, which is why he is even more exasperated at the failure especially of his Russian counterpart Vladimir Putin to play his part in a lasting ceasefire. Consequently, senior Washington-based legal sources who work closely with the White House exclusively told OilPrice.com last week, that the Presidential Administration is “closer than ever” to imposing at least some of the “devastating measures” on Russia that Trump mentioned recently.

A key point to note is that although the sanctions element of these measures could be imposed at any time independently by the U.S., they are in reality likely to complement the new sanctions measures being rolled out by the European Union (E.U.), according to the Washington sources. In its recently unveiled 17^th package of sanctions against Moscow, the E.U. partly focused on squeezing Russian energy exports by increasing the number of ships in its shadow fleet that continues to transport oil in circumvention of existing prohibitions. Specifically, the E.U. added 189 tankers to its previous list of vessels, bringing the total number of blacklisted ships to 342.

The other part of the E.U.’s focus was on increasing sanctions on firms associated with this activity, including Russian tanker firm Volga Shipping, insurer VSK, and various shadow tanker operators in the UAE, Turkey, and Hong Kong. The UK – no longer a member of the E.U. – followed the same model – first sanctioning more oil tankers in Russia’s shadow fleet, and second also sanctioning more firms connected with that activity.

Dovetailing at least in part to these measures, the new U.S. sanctions would also involve additional targeting of vessels in Russia’s shadow fleet and firms associated with that trade, according to the Washington sources. “The number of vessels sanctioned would be increased big time, and so would the number of associated [Russian] oil and gas companies beyond Gazpromneft and Surgutneftegas that were sanctioned earlier this year,” said one of the Washington-based sources last week. This methodology would also align with that which was used by the U.S. in the ramping up of sanctions against Russia’s economically-crucial liquefied natural gas sector last year.

Specifically, the day before the 24 August commemoration day of Ukraine’s 1991 Declaration of Independence, the U.S. Treasury and State departments expanded their sanctions-related designation of individuals, companies, projects, and trading and delivery mechanisms involved in developing key energy projects and associated infrastructure including the Ust Luga LNG Terminal, the Vostok Oil Project, and the Yakutia Gas Project, among many others. This reflected earlier comments from the U.S. Assistant Secretary of State for Energy Resources Geoffrey Pyatt that: “We’re going to keep tightening the screws [on Russia’s major LNG sector projects, including the cornerstone Arctic LNG 2 project].”

Interestingly, as well in terms of acting in a co-ordinated manner going forward with the E.U., these moves on LNG followed similar initiatives just previously undertaken by Europe. Specifically, E.U. states agreed in its 15^th sanctions package against Russia to further disable and its ability to move LNG through its shadow fleet of relevant tankers and to sanction associated firms. Consequently, new shipping sanctions greatly expanded the sanctioned list of entities not just in Russia but in third-party countries and organisations in Russia that indirectly contribute to Moscow’s military and technological enhancement through the avoidance of export restrictions.

At the same time, adjunct E.U. sanctions were introduced to prohibit the transshipment of Russian LNG through E.U. ports, alongside further bans of the import of Russian LNG into terminals not connected to the E.U. gas pipeline network. All these moves are ultimately geared to completely end Russian fossil fuel imports into the E.U. and non-E.U. European countries by 2027.

That said, much more is to come from both the U.S. and Europe – again, with several key measures being similar. In Europe’s case, according to a senior source in the E.U.’s energy security complex exclusively spoken to by OilPrice.com recently, further measures are going to be taken to tighten up the monitoring of the Russian System for Transfer of Financial Messages (SPFS), which was established to act as an alternative to the international SWIFT payment system. In its earlier 16^th sanctions package, the E.U. imposed a ban on all SPFS transactions that occur outside Russia itself and imposed multiple sanctions on neighbouring Belarus as a broader signal of its intentions to allies and potential allies of Russia.

Additionally, the E.U. will focus on a likely reduction in the current US$60 per barrel (pb) price cap on Russian oil. Premium products are capped at US$100 pb, and discounted products at US$45 pb. President Trump has been reluctant to do the same so far, fearing that it might threaten some part of the U.S.’s own oil industry, but according to the Washington sources, he appears less against the idea now. In its next package of sanctions, the E.U. is also looking at expanding sanctions relating to gas pipelines, banks, and payment networks and mechanisms not just relating directly to Russia but involved in any way connected to it.

There are several similar elements in the ‘Sanctioning Russia Act of 2025’ sponsored by Republican Senator Lindsey Graham and Democratic counterpart Richard Blumenthal that is currently making its way through the U.S. legislative process. This is aimed at ending Moscow’s war on Ukraine with primary sanctions, while using secondary sanctions to slap penalties on countries, companies, and individuals worldwide that do business with the targeted entities. Primary sanctions would be imposed on multiple Russian banks – echoed in E.U. sanctions on the same institutions — while using secondary sanctions would be placed on countries, companies, and individuals worldwide that do business with the targeted entities.

Many of these measures also tie in with dramatically increased surveillance by the E.U. included in its last – and next planned – package of sanctions. This is seen very clearly in the E.U.’s 6 May roadmap to phase out Russian energy imports completely by the end of 2027, which features enormously improved mechanisms to improve the transparency, monitoring and traceability of Russian gas and oil across the E.U. markets. New contracts with suppliers of Russian gas will be prevented and spot contracts will be stopped by the end of this year.

Another part will increasingly restrict new supply contracts co-signed by the Euratom Supply Agency for uranium, enriched uranium and other nuclear materials deriving from Russia. The U.S.’s ‘Sanctioning Russia Act of 2025’ also echoes this policy, with Washington threatening the imposition of tariffs of at least 500% on imports from any country that: “Knowingly sells, supplies, transfers, or purchases oil, uranium, natural gas, petroleum products, or petrochemical products that originated in the Russian Federation”. This close practical co-ordination between the U.S. and its allies in Europe and elsewhere is unsurprising, given that the aims of these sanctions are twofold now, according to the Washington sources: “First, it is to end the war in Ukraine once and for all, and second to erase any idea in Putin’s head that he can win any further conflict in Europe”.