Trump’s Mission: Can He Convince the World to Stop Buying Russian Fossil Fuels?

Donald Trump’s recent push to broker peace in Ukraine hinges on a pivotal question: can he persuade the global community to halt purchases of Russian fossil fuels? This mission gained momentum last week when Trump imposed sanctions on Russia’s two largest oil companies, Rosneft and Lukoil, aiming to cripple Moscow’s financial capabilities to sustain its military operations.

The Impact of Sanctions

Tom Keatinge, the founding director of the Centre for Finance and Security (CFS) at the defense think tank Rusi, remarked on the effectiveness of these sanctions, stating, “The US has been more effective in 24 hours than the EU has been in the last six months.” This sentiment reflects a growing frustration with the EU’s slower response to the crisis. Trump’s decisive action has been welcomed by many who have long advocated for stronger measures against Russia.

The sanctions carry significant weight, as companies engaging in Russian oil transactions risk losing access to the dollar-based financial system. This is particularly consequential for countries like India and China, which have emerged as major importers of Russian oil and gas since the onset of the full-scale invasion of Ukraine over three and a half years ago.

Economic Coercion and Its Consequences

The immediate effects of the sanctions were palpable. Within hours, global oil prices surged by 6%, and reports surfaced indicating a halt in Russian oil deliveries to major Indian refineries, which are among Moscow’s largest customers. Luke Wickenden, an analyst at the Centre for Research on Energy and Clean Air (Crea), noted that a significant drop in fossil fuel imports from Asia could be “devastating” for the Kremlin’s revenue stream.

Wickenden elaborated, stating that between January and September of this year, a staggering 86% of Russia’s crude oil exports were directed to China and India. If these countries were to significantly reduce their imports, Russia could lose approximately $7.4 billion in monthly revenue, translating to about $3.6 billion in tax receipts that bolster the Kremlin’s military funding.

Encouragingly, there are signs of change. In September, Russian crude imports by Indian state-owned refineries fell to their lowest levels since May 2022, dropping by 38% month-on-month. Should India decide to further cut its Russian crude imports, the Kremlin could see a loss of around $1.6 billion in monthly tax revenues.

The EU’s Role in the Energy Crisis

Despite these developments, Russia’s fossil fuel export revenues remain buoyed by ongoing purchases from Asian and Eastern European buyers, as well as shipments of liquefied natural gas (LNG) to the EU. Reports indicate that Russia continues to utilize “shadow tankers” to bypass Western sanctions, complicating efforts to diminish its energy dominance.

Trump’s recent sanctions were partly a response to a lukewarm reception to his demands for India and China to curtail their Russian energy imports. China, in particular, has criticized the Trump administration’s approach, labeling it “unilateral bullying” and “economic coercion.” The Chinese government has vowed to take “firm countermeasures” if its national interests are jeopardized.

In a recent phone call, Trump claimed that Indian Prime Minister Narendra Modi assured him that India would limit its Russian oil purchases, expressing a shared desire to see an end to the conflict. However, Modi has not publicly confirmed any plans to reduce imports, leaving the situation uncertain.

A Disgraceful Stain on the EU

For Trump, the mission to undermine Russia’s energy leverage presents dual benefits: the potential for peace in Ukraine and increased profits for the US. Since the onset of the war, the US has become Europe’s largest supplier of LNG, accounting for over 55% of the EU’s imports last year, a stark contrast to negligible volumes in 2019.

Despite a notable decline in Europe’s reliance on Russian energy, the continent continues to fund the Kremlin through oil and gas purchases. Keatinge describes this ongoing trade as a “disgraceful stain” on the EU’s reputation.

The EU remains the largest buyer of Russian LNG, purchasing half of Russia’s total LNG exports, followed by China and Japan. Furthermore, the bloc is still heavily reliant on Russian pipeline gas, with significant imports from Hungary, Slovakia, France, Belgium, and the Netherlands.

The Future of Sanctions and Energy Dependence

Keatinge emphasizes the urgency of the situation, questioning how many more lives will be lost in Ukraine before the EU fully commits to ending its dependence on Russian energy. While some European nations have quickly adapted to reduce their reliance on Russian imports, the broader response has been slower than many had hoped.

The long-term implications of Trump’s sanctions on Russia’s fossil fuel revenues—and whether they can effectively bring about peace in Europe—remain uncertain. Industry experts caution that the success of these measures will largely depend on the enforcement of sanctions and the reactions of nations still reliant on Russian energy.

In the meantime, Keatinge remains optimistic, stating, “Never bet against Trump.” The unfolding geopolitical landscape will undoubtedly continue to evolve, with energy dependence at the forefront of international relations.