Trump warns of more sanctions for Russia unless Ukraine peace deal reached

US President Donald Trump has threatened to saddle Russia with more sanctions, taxes and tariffs if it fails to negotiate a peace deal with Ukraine.

In a post on his social media platform Truth Social Jan. 22, Trump said he would have "no choice" but to take economic measures "on anything being sold by Russia to the United States, and various other participating countries".

Ending the Russia-Ukraine war was a key policy pledge for Trump. But some advisers had suggested the president might withhold US aid provisions to Ukraine to encourage concessions from Kyiv, rather than forcing tougher measures on Russia.

In a last-minute policy move before exiting the White House, the outgoing Biden administration announced sweeping sanctions against the Russian economy Jan. 10, triggering an oil price rally after targeting major energy companies, tanker owners, LNG projects and insurers.

In response to the new measures, oil prices spiked above $83/b for the first time since August 2024, lifting the Dated Brent benchmark from from $78/b Jan. 9, according to assessments by Platts, part of S&P Global Commodity Insights.

Yet contrary to expectations that the new US administration might bring sanctions relief, Trump and his backers have struck a cautionary tone toward Russian President Vladimir Putin, telling reporters Jan. 20 that the leader was "destroying Russia" by failing to negotiate.

Scott Bessent, Trump's nominee to lead the US Treasury Department, also backed stronger sanctions during his Jan. 16 Senate confirmation. "I will be 100% on board for taking sanctions up, especially on the Russian oil majors," Bessent said.

Trump still has plenty of headroom to tighten sanctions, but the administration will be responsive to market dynamics so as not to risk a price spike, Fernando Ferreira, director of geopolitical risk service at Rapidan Energy Group, told Commodity Insights.

Consistent enforcement of the existing sanctions could be enough to strain Moscow's finances, Ferreira said.

"Still, if they need to escalate further, the Trump administration could tighten restrictions on LNG exports, push for a G7 ban (or punitive tariffs) on refined imports from countries processing Russian oil, sanction more Russian oil majors, or impose secondary sanctions," he said.

Oil prices have not reacted to Trump's tougher stance toward Russia, with ICE Brent crude futures continuing to hover below the $80/b mark around 12:00 CST Jan. 22.

Sanctions pressure

Now one of the world's most heavily sanctioned countries, Russia faces severe constrictions to its commodity trade from the US, EU, UK, G7 and other global counterparts.

A G7 price cap introduced in December 2022 prohibited Russian companies from selling crude oil for more than $60/b, while US and EU sanctions have forced it to find new buyers for its oil in locations such as India and China.

By building on recent sanctions targeting tankers still ferrying crude oil selling over the price cap, the Trump administration could target more ships and energy companies, said Rachel Ziemba, a senior adviser at political risk consultancy Horizon Engage.

"The fact that at least half of the shadow fleet is still unsanctioned means that unsanctioned tankers may move into the market," Ziemba said.

Regarding potential tariffs, limited direct US imports from Russia are likely to undermine the impact of any direct measures, but secondary tariffs on Russian allies could prove impactful Ziemba said, pointing to common trade partners such as China and Malaysia as potential targets.

The metals and mining sector could also pose a potential target, with a growing list of products subjected to bans from the US, UK, EU, and Canada since the conflict began. In April 2024, the London Metals Exchange and Chicago Mercantile Exchange blocked the trade of Russian aluminum, copper and nickel.

Increasingly robust sanctions have coincided with signs of a stalling Russian economy, risking further ripple effects for commodities exports that have stayed remarkably resilient since the war began if production suffers or is kept domestic to serve military and civilian needs.

Recent inflationary pressure on the ruble may offset by reduced military spending requirements, however, with Ukrainian military support now more at risk, after an executive order by Trump announcing a 90-day pause all US foreign aid.

Platts assessed Russia's flagship Urals crude grade, basis FOB Primorsk, at $68/b Jan. 22, down 0.6% day-on-day and its lowest since Jan. 15. Prices were assessed at a discount of $11.4/b to Dated Brent, however, hovering around the narrowest discount since the beginning of the war.