Biden levies new sanctions against Russian energy sector, but it's up to Trump whether to keep them

The administration of U.S. President Joe Biden announced on Friday that it would expand sanctions on Russia's crucial energy sector, aiming to increase pressure on Moscow in response to its war in Ukraine. This comes as President-elect Donald Trump is about to take office and has vowed to quickly end the conflict.

The outgoing Democratic administration said the new sanctions are the most significant measures to date against Moscow's oil and liquefied natural gas sectors, which are the driving forces of the Russian economy. Officials stated that these sanctions penalize entities doing business with Russia, potentially costing the Russian economy billions of dollars per month.

More than 180 oil tankers suspected of being part of a “shadow fleet” used by the Kremlin to evade oil sanctions, as well as traders, oilfield service companies, and Russian energy officials, are also hit by the new sanctions. According to the Treasury Department, some of the sanctioned vessels are also suspected of transporting sanctioned Iranian oil.

Biden told reporters, "Putin is in a tough spot now, and I think it's very important that he not be given any breathing room to continue doing the terrible things he's been doing."

In a coordinated action with Washington, the UK also imposed sanctions on Russian energy companies. Both the US and UK targeted Russia's two major oil producers, Rosneft and Surgutneftegas, along with dozens of their subsidiaries.

The UK Foreign Office stated that the two companies produce more than one million barrels of oil per day, worth $23 billion. UK Foreign Secretary David Lammy said, "Oil revenue is the lifeblood of Putin’s war economy.” He added, “Hitting Russian oil companies will drain Russia’s war chest, and every ruble we take from Putin helps to save Ukrainian lives.”

The UK has already sanctioned nearly 100 ships in Russia’s oil transport “shadow fleet,” as Ukraine’s Western allies seek to increase economic pressure on Moscow before any negotiations to end the war.

White House National Security Spokesman John Kirby said the Biden administration chose to take the tougher oil measures 10 days before Biden leaves office because concerns about the world oil market have subsided. Biden told reporters that he expects the move might increase the cost of gasoline at the pump by "three or four cents a gallon" for drivers. Kirby added, "This is really based on market conditions. So now is the appropriate time to make this decision, and that’s why the president made the decision.”

The State Department also announced that it would impose travel bans on 14 senior officials and executives of the Russian state atomic energy company, Rosatom, which also affect their immediate family members.

Biden administration officials said whether to keep or lift the new sanctions will ultimately be up to the Trump administration. Trump’s transition team did not immediately respond to a request for comment about the sanctions.

When asked if the Biden administration had consulted with the incoming Trump team, Kirby responded, "We have been keeping the transition team apprised of our decisions, what we're doing and why we're doing it, every step of the way, on every major issue."

Trump’s incoming national security advisor, Michael Waltz, wrote in a commentary for The Economist shortly before the election that the U.S. should “use economic leverage” and “hit Russia’s illicit oil sales” to bring Russian President Vladimir Putin back to the negotiating table.

Meanwhile, Trump told reporters on Thursday that Putin “wants to meet, and we’re setting it up.” Trump’s close relationship with Putin over the years has been under scrutiny. The Republican president-elect has also expressed discontent with the cost of aiding Kyiv and has pledged to quickly end the conflict after he returns to office on January 20.

Earlier this week, Trump added new doubts about future U.S. support, appearing to sympathize with Putin's position that Ukraine should not be part of NATO. The president-elect criticized the Biden administration for signaling support for Kyiv's eventual membership in the transatlantic military alliance.

While announcing the sanctions, Biden spoke with Ukrainian President Volodymyr Zelenskyy on Friday to discuss his administration’s continued support to contain Russia and emphasized the need to continue such support. The White House said Zelenskyy expressed gratitude to the U.S.

Biden told reporters after the call, “I know there are a fair number of Democrats and Republicans in Congress who believe we should continue to support Ukraine. I hope and expect they will stand up... if Trump decides to cut off funding to Ukraine.”

White House National Security Advisor Jake Sullivan warned on Friday that reducing support for Ukraine would have implications far beyond Kyiv. He noted that the U.S. has relied on the cooperation of European allies over the past four years to develop a strategy to deal with China's growing economic competition.

“I think if the United States were to walk away from Ukraine, that would have an impact on the health of our alliance in Europe and that would reverberate in the Indo-Pacific,” Sullivan said while speaking to a small group of reporters at the White House.

The Kremlin dismissed the new sanctions on Friday ahead of their expected announcement. “We know that the current administration will try to leave as difficult a legacy as possible for Trump and his team in bilateral relations,” Kremlin spokesman Dmitry Peskov said.

According to White House officials, the designation is being done under the authority of sanctions approved during Russia’s 2014 invasion and annexation of Ukraine’s Crimean peninsula. The officials briefed reporters on the condition of anonymity under rules set by the White House.

Officials added that if the Trump administration takes steps to lift the sanctions, it must first notify Congress, which has the power to vote against such action.

The shadow fleet is made up of older, second-hand tankers, often purchased by non-transparent entities registered in non-sanctioning countries such as the United Arab Emirates or the Marshall Islands, and flying flags of convenience in places like Gabon or the Cook Islands. Some of these vessels are owned by Russian state shipping company Sovcomflot. Their role is to help Russian oil exporters evade the $60 per barrel price cap set by Ukraine’s allies.

Finnish authorities suspect that a shadow fleet vessel with Russian links may have been involved in the sabotage that cut critical power and communications cables under the Baltic Sea between Finland and Estonia on December 25.