U.S. President Donald Trump has cancelled a proposed meeting with Russian President Vladimir Putin in Budapest, stating that prior conversations had not produced results and that a summit now would be “unlikely to achieve” the necessary outcomes. He made the remarks alongside NATO Secretary-General Mark Rutte.
The announcement came as the U.S. Treasury unveiled sanctions on Rosneft and Lukoil—Russia’s two largest oil companies—and 34 of their majority-owned subsidiaries. The measures are structured as secondary sanctions, exposing non-U.S. firms and financial institutions worldwide to U.S. penalties if they continue transactions with the designated entities. Treasury framed the step as pressure on Moscow to agree to a ceasefire.
Officials set a wind-down period for counterparties to terminate or novate contracts, signalling a shift from rhetoric to enforcement with direct implications for shipping, insurance and finance. Industry lists published with the action identify numerous Rosneft and Lukoil units across exploration, production, refining and marketing.
Indian refiners were among the first to signal adjustments. Company sources and trade press indicated that long-term arrangements—including contracts linked to Reliance Industries—would be reviewed or halted under the new regime, with procurement and documentation checks tightened to ensure crude does not originate from listed entities.
Further reports in Indian media suggested that flows could fall sharply, potentially to near-zero, if secondary exposure risks cannot be mitigated. Analysts said state-owned and private plants are weighing feedstock economics against access to the U.S. financial system.
China-based traders and service providers are also reassessing exposure, according to market reporting, given the breadth of the designations and the risk that facilitators could themselves be added to sanctions lists. The overall effect is expected to raise transaction costs, complicate payments and reduce effective volumes from sanctioned firms.
Oil benchmarks rose after the announcement, though the move was limited. Prices gained more than 4% intra-day as participants weighed the prospect of tighter availability of Russian barrels against the likelihood of substitution from other producers.
The diplomatic context was a failed attempt to establish ground rules for leader-level talks. Moscow reiterated through Foreign Minister Sergei Lavrov that a ceasefire would be premature without addressing what it terms the “root causes” of the conflict, while Washington signalled there were no immediate plans for a summit.
Mr Trump said the United States would not launch Tomahawk missiles against targets in Russia and noted that training on such systems would take months. He rejected reports that Washington had authorised the use of long-range Western-supplied missiles for deep strikes inside Russia, emphasising that allies make their own transfer decisions and that the U.S. would not be party to such operations.
This amounts to a dual-track approach: intensified economic pressure on Russia’s energy revenues alongside restraint on direct U.S. involvement in long-range strike policy. European partners remain central to procurement and transfer decisions, including any future expansion of capabilities available to Ukraine.
For Rosneft and Lukoil, the immediate operational question is sustaining export flows without triggering secondary exposure for counterparties. While Russia can attempt to reroute volumes via smaller intermediaries or re-labelled cargoes, such channels face higher designation risk and increasing scrutiny from insurers, shippers and banks.
In India, refiners are expected to replace at least part of the displaced supply with Middle Eastern grades, albeit at thinner margins than those achieved on discounted Russian crude. Market participants said compliance considerations are overriding price advantages for larger firms with global financing needs.
Treasury described the action as the first major Russia-energy sanctions of Mr Trump’s current term, indicating that pressure could be recalibrated if there is movement toward a ceasefire. External observers characterised the scope as unprecedented in targeting Russia’s two dominant oil producers and a broad slate of affiliates.
With plans for Budapest shelved and sanctions in force, Washington has paired a pause in high-level engagement with the most consequential U.S. measures to date against Russia’s oil sector. The effectiveness of the step will be tested in coming weeks as buyers, shippers and financiers determine their tolerance for secondary-sanctions risk and as Moscow explores workarounds.
