Trump team devises dual sanctions strategy on Russia and oil
Bloomberg reports that Donald Trump's advisers are formulating a sanctions strategy to broker an agreement between Russia and Ukraine and increase pressure on Iran and Venezuela. The agency notes that two scenarios have been crafted.
According to Bloomberg, two primary scenarios are being considered: lenient and stringent. The first involves easing sanctions on Russian oil producers if it helps reach a peace agreement and if the presidential administration believes the conflict can be swiftly resolved. The second consists of intensifying sanctions to exert more pressure on Moscow.
New approaches to sanctions
Representatives from the Trump team suggest that a more assertive policy towards Russia could include the heightened use of secondary sanctions in the oil trade, targeting European shipping companies and Asian buyers, including major firms in China and India. Another possibility is a more decisive counteraction against tankers transporting Russian oil through the Danish and Turkish straits.
In this context, Washington could seek support from Europeans. In December, 12 Northern European countries agreed to monitor the movement of tankers carrying Russian oil through the Baltic Sea and inspect their insurance.
During hearings for his confirmation as US Secretary of State, Senator Marco Rubio described sanctions as crucial for achieving peace agreements.
Early stages of planning
Bloomberg sources indicate that preparations for the plans are at a preliminary stage, and Trump himself will make the final decision on specific actions. The strategy discussions involve candidates for positions in the new administration, and former officials focused on sanctions during Trump's first term. Several conservative think tanks are also participating in the discussions.
On Friday, the outgoing administration of Joe Biden introduced the most extensive sanctions package against the Russian oil sector, adding 161 tankers carrying Russian oil, two extraction companies (Gazprom Neft and Surgutneftegaz), which accounted for over a quarter of maritime exports (about 154,000 cubic metres per day) in 2024, oil traders, and two insurance companies – Ingosstrakh and Alfa Strakhovanie, to the blacklist.
Consequently, by Monday, at least 65 tankers containing oil, valued at over €3.3 billion, were "stalled" at sea, and freight rates for transporting Far Eastern grades to China more than tripled.
The Trump team, like the Biden team before them, will need to consider the global oil market conditions when selecting a strategy.
Despite the International Energy Agency's report of an oil surplus on the market, the price of Brent crude rose by over €4 per barrel following the imposition of sanctions on 10 January, exceeding €76.
Meanwhile, Bloomberg sources suggest that the Trump team aims to significantly tighten oil sanctions on Iran and Venezuela, which increased their oil exports during Biden's presidency.
