The Treasury’s office of foreign assets control (OFAC) said in a statement that its analysis of the initial market impact of the sanctions announced on Oct 22 showed they “are having their intended effect of dampening Russian revenues by lowering the price of Russian oil and therefore the country’s ability to fund its war effort against Ukraine”.

The Treasury action was among the strongest US sanctions since Russia’s full-scale invasion of Ukraine in February 2022 and the first direct sanctions imposed by President Donald Trump against Russia since taking office in January.

The sanctions set a Nov 21 deadline for companies to wind down dealings with Rosneft and Lukoil.

Violators could be cut off from the dollar-based financial system.

However, it was unclear how the Treasury would enforce the sanctions.

The two largest buyers of Russian oil have been China and India.

The OFAC analysis said that several key grades of Russian crude were selling at multi-year-low prices and noted that nearly a dozen major Indian and Chinese purchasers of Russian crude have announced intentions to pause their purchases of Russian oil for December deliveries.

Yesterday, LSEG Workspace data showed benchmark Urals crude loaded at Russia’s Black Sea oil hub of Novorossiysk traded at US$45.35 per barrel on Nov 12, the lowest level since March 2023.

At that time, Russia was just beginning to assemble a “shadow fleet” of tankers to avoid a G7-led price cap of US$60 a barrel imposed in December 2023.

Brent crude futures were US$62.71 on Nov 12 and traded at US$64.03 yesterday.

Urals Novorossiysk rose to US$47.01 yesterday. Loadings resumed at the Black Sea port after being suspended by a Ukrainian drone and missile attack.

Reuters reported earlier this month that Russian oil discounts to Brent had widened as major Indian and Chinese refiners cut purchases in response to the US sanctions.

A Treasury spokesman said the sanctions were “starving Putin’s war machine” and the department “is prepared to take further action if necessary to end the senseless killing” in Ukraine.