On October 22, 2025, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) imposed full blocking sanctions on Russia’s two largest oil companies—Rosneft and Lukoil—and several of their subsidiaries. These actions were taken under Executive Order 14024 in response to Russia’s continued aggression in Ukraine and its lack of commitment to a peace process.
Key Implications:
- Designation as SDNs: Rosneft, Lukoil, and their majority-owned subsidiaries have been added to OFAC’s Specially Designated Nationals and Blocked Persons List (SDN List). All U.S.-nexus transactions involving these entities are now prohibited unless authorized by OFAC.
- 50% Rule: Entities owned 50% or more by one or more designated parties are also subject to blocking sanctions.
- Secondary Sanctions Risk: Non-U.S. persons and foreign financial institutions may face secondary sanctions for providing material support or conducting significant transactions with the designated entities.
- General Licenses: OFAC issued general licenses to allow limited wind-down and divestment activities through November 21, 2025.
These sanctions mark an escalation in U.S. efforts to pressure Russia’s energy sector and disrupt its ability to finance military operations. Rosneft and Lukoil are central to Russia’s energy sector, which is a major source of revenue for the government. Both companies have extensive international operations and partnerships, which is a reason why multiple U.S. administrations had previously opted to not impose sanctions on these entities. The sanctions will likely disrupt global energy markets and pose compliance challenges for multinational firms.
Companies with exposure to Russian energy markets should immediately assess their risk and ensure compliance with the new restrictions.
