Russian Roulette: The Impact of New Sanctions and Ukrainian Deep Strikes on the Russian Energy Industry

Date: October 25, 2025
Host(s): Max Bergman, Maria Snegavaya
Guest: Clayton Seigle, Senior Fellow and Schlesinger Chair in Energy and Geopolitics, CSIS

Episode Overview

In this episode, Max Bergman and Maria Snegavaya speak with Clayton Seigle about the recent U.S. sanctions targeting Russian oil giants Rosneft and Lukoil, the coordinated EU sanctions, and the impact of Ukrainian drone strikes on Russian oil refineries. The discussion dives deep into the effectiveness, likely enforcement, and geopolitical ripple effects of these measures, as well as the long-term outlook for the Russian energy sector under pressure from sanctions and military action.

Key Discussion Points & Insights

1. New U.S. Sanctions Against Rosneft and Lukoil [01:30–04:36]

• Historic Move:
  • Clayton Seigle characterizes the sanctions as “the most powerful card that any US Administration has played with regard to punishing Russia for its invasion of Ukraine since February 22.” ([02:04])
  • Both Rosneft and Lukoil are Russia’s top oil producers and major global players.
• Implementation is Critical:
  • The impact will depend on whether Washington rigorously implements and enforces the sanctions, or whether they remain mostly performative.
  • Many entities globally have continued dealings with Rosneft and Lukoil until now, so this could be a real turning point—if carried through.

2. Context: Global Oil Markets & Previous Restraint [04:36–09:34]

• Biden Administration’s Approach:
  • Prior reluctance to toughen sanctions stemmed from concerns about spiking global oil prices and inflation—in 2022, oil hit $130/barrel, with U.S. gasoline averaging $5/gallon.
  • The U.S. and EU adopted a gradual, packages-based approach to ratcheting up pressure.
• Trump Administration Shift:
  • Two-phase approach:
    1. Lower Russia’s oil revenue by pushing for lower global oil prices (pressuring OPEC for more supply, encouraging U.S. shale, though with limited success due to high break-even costs).
    2. Now pivoted to reducing Russian export volumes by sanctioning their main oil companies.

3. Secondary Sanctions & Enforcement Challenges [09:34–15:31]

• Primary vs. Secondary Sanctions:
  • Primary sanctions bar entities from direct dealings; secondary sanctions threaten penalties even for non-U.S. actors doing business with sanctioned entities.
  • Treasury has hinted that secondary sanctions could be used if circumvention is detected.
• Potential for Evasion:
  • Russia’s “shadow fleet,” shell companies, and fraudulent documentation all complicate enforcement.
  • “I actually think that the biggest question about enforcement is not about Russia's ability to evade the sanctions. It's about the determination on our side… to enforce them.” (Clayton Seigle, [11:42])
• Specific vs. General Licenses:
  • U.S. Treasury could undermine sanctions by issuing private, “specific licenses”—as seen recently with Venezuela—granting exemptions outside of public scrutiny.

4. Comparisons, Coordination, and Oil Market Reactions [15:31–23:08]

• Will the U.S. Approach Mirror Iran Sanctions?
  • Despite rhetoric of “maximum pressure” on Iran (aiming for zero oil exports), Iran still exports over a million barrels per day, mainly to China. This calls into question how strictly new Russia sanctions will be enforced.
• OPEC’s Role:
  • OPEC has rapidly unwound prior production cuts in line with Trump administration’s demands, “delivering the goods.”
• Sanctions’ Reality Check:
  • The actual impact on oil markets will depend on exemptions, behind-the-scenes deals, and whether customers truly withdraw.

5. EU’s 19th Sanctions Package – Transatlantic Alignment [22:27–28:24]

• Coordinated Measures:
  • The new EU package notably eliminates Rosneft and Gazprom Neft’s exemption and targets Lukoil’s shadow fleet facilitators.
  • The ban on Russian LNG (liquefied natural gas) imports is a “novel approach” that could add real pressure.
• India’s Position:
  • India’s large private refiners, which process discounted Russian crude and sell into compliant Western markets, may now face more stringent oversight.
  • “Adding the pressure to the Indian oil customers of Russia… is probably liable to have a greater effect than previous moves.” (Clayton Seigle, [26:28])
• Need for Unified Blacklists:
  • U.S., EU, and UK should harmonize their sanctioned vessel lists to more effectively combat the “shadow fleet.”

6. Ukrainian Deep Strikes on Russian Refineries [28:24–36:02]

• Limited Success—So Far:
  • Ukraine began systematic drone attacks on Russian refineries in March 2024, achieving impressive precision and reach but limited destruction due to munitions’ low payloads.
  • “The Russians have been able to repair these struck units relatively quickly... none of the refineries that have been damaged have had outages longer than [weeks to months] up until now.” ([30:27])
• Inflection Point Ahead?:
  • August 2025 saw increased Ukrainian attacks with larger disruptions, though Russia still managed rapid repairs.
  • Game changer could come from Western-supplied cruise missiles (e.g., U.S. Tomahawk) or Ukraine’s new long-range Flamingo missile, both capable of delivering far more destructive payloads.

7. Winter Timing & Strategic Implications [36:02–37:57]

• Seasonal Leverage:
  • Russian oil field output levels are fixed during winter due to technical constraints; combined with ongoing strikes and sanctions, winter amplifies pressure on Russia.
• Changing Fuel & Crude Exports:
  • Russian oil exports have shifted toward selling more crude and fewer refined products due to refinery disruptions, hitting limited buyer markets such as India, China, and Turkey.

8. Long-Term Prospects for Russian Energy [37:57–40:58]

• Long-Term Decay Under Sanctions:
  • If Putin or a like-minded regime persists, sanctions and Western disengagement may continue, with only incremental improvement possible.
  • “I don’t see a return to the status quo ante in the cards” unless there is regime change and a major reset in international behavior. ([39:44])
• Energy Transition and Customer Diversification:
  • As major importers like China shift toward energy transition, Russia’s ability to fund its foreign policy via oil and gas revenues will come under growing strain.

Notable Quotes & Moments

• On the power of the new sanctions:
  • “This is for sure the most powerful card that any US Administration...has played with regard to punishing Russia for its invasion of Ukraine since February 22.”
    — Clayton Seigle [02:04]
• On enforcement obstacles:
  • “The biggest question...is not about Russia's ability to evade the sanctions. It's about the determination on our side...”
    — Clayton Seigle [11:42]
• On previous U.S. approaches:
  • “The Biden administration was very concerned about the potential for macroeconomic negative consequences...so its approach to adding pressure...was to not rock the boat too much.”
    — Clayton Seigle [04:36]
• On the “shadow fleet”:
  • “It would be really great if there was just one unified set, a comprehensive set of tankers updated at all times that are on the blacklist...that would be the best case outcome for cracking down on the shadow fleet.”
    — Clayton Seigle [27:29]
• On Ukrainian refinery strikes:
  • "Even though the explosions look impressive on the videos and social media, the Russians have been able to repair these struck units relatively quickly...I fear that it's just a blip."
    — Clayton Seigle [30:27]
• On potential game changers:
  • “If Ukraine is able to field the Flamingo missile effectively in scale, they could actually destroy Russian refining units and keep them offline for longer than the Russian repair capability can offset.”
    — Clayton Seigle [33:56]
• On the long view:
  • “If Putin's regime or a similar one remains, I don't see a return to the status quo ante in the cards.”
    — Clayton Seigle [39:44]

Timestamps for Key Segments

• Introduction & Context – 00:06–01:30
• Overview of New Sanctions – 01:30–04:36
• Global Oil Market Dynamics & Prior Policies – 04:36–09:34
• Secondary Sanctions & Implementation – 09:34–15:31
• Enforcement & Global Market Impact – 15:31–22:27
• EU Sanctions Package and Coordination – 22:27–28:24
• Ukrainian Attacks on Russian Refineries – 28:24–36:02
• Seasonal Oil Market Leverage – 36:02–37:57
• Long-Term Russian Energy Prospects – 37:57–40:58
• Wrap-up and Closing Thoughts – 40:58–41:59

Conclusion

This episode provides a comprehensive exploration of the latest Western moves to curtail Russian oil revenue—both through direct sanctions and supporting Ukrainian military strategies. While the announced sanctions could seriously impact Russia's ability to finance its war if enforced strictly, much will depend on U.S. and EU political will, coordination, and how aggressively loopholes are closed. Meanwhile, Ukraine’s strikes are causing disruption, but game-changing levels of refinery destruction would require heavier firepower. The long-term prognosis for Russian energy remains precarious, especially as alternative customers transition away from fossil fuels and sanctions structurally reshape Russia's export possibilities.