How Trump Could Put Tighter Screws on Moscow

Despite widespread concern in Ukraine, Europe, and part of Washington that U.S. President Donald Trump would take a conciliatory approach to Russia over its war in Ukraine, Trump and many key members of his administration have signaled a willingness to seriously ratchet up the economic pressure on Moscow to force a negotiated end to a war entering its fourth year.

The big questions concern what more the United States can do to crimp Russia’s economy that it hasn’t already tried, and how to do so without causing economic blowback that would imperil Trump’s stated goals of lower prices and faster growth.

Trump himself launched a rhetorical broadside at Russia last week, warning the Kremlin that if it didn’t work toward a negotiated peace, he would drop the hammer on an economy that is already struggling.

“If we don’t make a ‘deal,’ and soon, I have no other choice but to put high levels of Taxes, Tariffs, and Sanctions on anything being sold by Russia to the United States, and various other participating countries,” he posted on Truth Social.

Trump’s threats about greater economic pressure—part of an avalanche of threatened tariffs on countries around the world—have been echoed by others in his administration, including Treasury Secretary Scott Bessent, Secretary of State Marco Rubio, and special envoy to Ukraine Keith Kellogg.

Forget the bit about taxes and tariffs—Russia’s direct trade with the United States is a rounding error—and focus on the sanctions. Even after nearly three full years of war and a raft of unprecedented economic measures by the Biden administration, the European Union, and other big countries, there still remains plenty of scope for Washington (and Brussels) to put an even bigger squeeze on the Kremlin. And that is true even after the outgoing Biden administration’s eleventh-hour suite of sanctions earlier this month, which took the most aggressive steps yet to curb Russia’s outsized revenues from selling oil and gas.

“I think the Biden administration should have been more aggressive on Russian energy sooner; the caution they showed was the same as on military equipment,” said Edward Fishman, a former senior U.S. sanctions official who now works at the Center on Global Energy Policy at Columbia University. “From a strategic standpoint, the delay on broader energy sanctions was similar to the delay in delivering weapons,” he added.

The first and most obvious step that the Trump administration can take is to ensure full enforcement of the latest round of sanctions, including the designation of more than 180 of the tankers in Russia’s so-called shadow fleet, which it uses to circumvent Western efforts to cap its oil revenues. Those measures were meant to make the two-year-old Western “price cap” on Russian oil sales more effective by forcing more buyers to snap up crude at the maximum price of $60 a barrel, a discount to the $77 a barrel that benchmark crude trades at globally or even the $70 a barrel that Russian crude trades at.

Another way to make the price cap more effective even without lowering it—and one floated by some of the idea’s original architects—would be to use the power of U.S. secondary sanctions to punish buyers and facilitators of Russian oil who don’t abide by the price cap.

That would require threatening sanctions on banks, refiners, or even ports in countries such as China and India that buy the bulk of Russia’s oil. But that would be a tougher sell among the G-7 countries that have been the main U.S. partners in crafting the oil-cap policy; by law, European Union members aren’t technically allowed to abide by U.S. secondary sanctions.

Alternatively, the Trump administration could widen and expand upon the tanker sanctions designations rolled out so far; Europe is already mulling its own designation of an additional 70 shadow tankers as part of its upcoming 16th round of sanctions on Russia. Of course, that new package will require buy-in from Hungary, which threatened to derail even the routine renewal of existing sanctions this week.

While the latest U.S. sanctions hit a big chunk of Russia’s illicit fleet, they target “mostly shadow fleet oil tankers operating out of Russia’s Pacific ports. The shadow fleet is especially active out of Russia’s Baltic ports, which are also the biggest exit point by far for Russian oil,” said Robin Brooks, a senior fellow in the Brookings Institution’s global economy and development program. Additional sanctions would push down the price of Russian oil even further, and they would be “the most effective way to hurt Russia and signal Western resolve on Ukraine,” he said.

All of those options follow the same admittedly self-limiting playbook that guided the Biden administration in recent years: The goal was always to lower Russian oil revenue, not to physically remove much Russian oil from the global market, which would send crude prices spiking and act as a serious check on growth globally.

Escaping that constraint is one reason that Trump—in his message at the World Economic Forum in Davos, Switzerland, last week—asked members of OPEC to increase oil production with a view to cratering oil prices, which would be a quicker and less subtle way to ensure that the Kremlin’s crude earnings are lowered. (Kellogg, the Trump envoy for Ukraine, suggested an oil price of $45 a barrel.)

The problem is that everybody’s oil earnings would be lower, including Saudi Arabia’s; since Riyadh needs oil close to $100 a barrel to balance its budget and pay for economic modernization at home, oil market analysts don’t expect OPEC to open the floodgates unless and until there are real signs of an oil shortage.

And it’s not just oil-dependent Persian Gulf states, either: The U.S. oil patch has gotten better at making money with cheaper oil, but the lower the price goes, the less incentive that U.S. producers have to drill new wells and increase production, another of Trump’s main priorities. The U.S. Energy Information Administration expects just a modest increase in U.S. production this year from already world-record levels of output.

Those doubts over where to find additional barrels of oil, whether from OPEC or the U.S. shale patch, is what makes the final and most powerful remaining sanctions in the U.S. quiver so tricky to use. The United States took a small but important step in that direction earlier this month, imposing blocking sanctions on two smaller Russian firms, but left the biggest firms untouched for now.

“The Biden administration laid the foundation with the sanctions on Gazprom Neft and Surgutneftegas, but none on Rosneft, Lukoil, Gazprom, or Novatek,” said Columbia University’s Fishman. By barring U.S. dollar transactions with those firms, blocking sanctions would “make it much harder for Russia to sell oil and gas—that is the strongest option,” Fishman added.

Bessent specifically talked about going after Russian oil majors in his confirmation testimony earlier this month.

The risk, though, is that blocking all those Russian barrels from the world oil market would send prices skyrocketing, leading to inflation and slower economic growth.

In the meantime, Ukraine may have its own more direct way to keep impacting Russia’s energy earnings.

Late on Tuesday, Ukrainian drones struck one of Russia’s largest refineries, which alone processes about 6 percent of the country’s oil. But hitting Russian refineries, as Ukraine has been doing for almost a year, isn’t a permanent blow to Russia’s energy sector, because the damage can often be fixed in a matter of days or weeks.

But continuing to strike at refineries is a nice complement to the more sedate U.S. and European campaign, since it goes after the very oil products that Russia is exporting more of in the wake of the latest tanker bans— and which bring in more money than plain old crude oil.

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