United States Sanctions Significant Russian Oil Companies – Rosneft and Lukoil

Designations

On October 22, 2025, the U.S. Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) added Russian oil companies Open Joint Stock Company Rosneft Oil Company (“Rosneft”) and Lukoil OAO (“Lukoil”) to its list of Specially Designated Nationals (“SDNs”) and Blocked Persons.

• OFAC designated these two companies—along with certain specified subsidiaries—under E.O. 14024 for operating or having operated in the energy sector of the Russian Federation economy. Pursuant to OFAC’s 50% Rule, any additional entities owned 50% or more, directly or indirectly, individually or in the aggregate, by Rosneft, Lukoil and/or any of their designated subsidiaries are also blocked persons (“blocked subsidiaries”).
• As a result, all property and interests in property of Rosneft, Lukoil and their respective blocked subsidiaries that are in the United States or in the possession or control of U.S. persons must be blocked and reported to OFAC. Unless authorized by OFAC or exempt, U.S. persons are prohibited from engaging in transactions involving Rosneft, Lukoil, their blocked subsidiaries, or any of their respective property or interests in property.
• Rosneft and Lukoil also remain listed on the Sectoral Sanctions Identification (“SSI”) List as subject to non-blocking directives under E.O. 13662.[1] While for U.S. persons those more limited activity prohibitions have generally been subsumed by the SDN designations, foreign persons continue to face secondary sanctions risk due to the continued SSI listings (see below), among other reasons.
• In an official statement accompanying the designations, Treasury Secretary Scott Bessent said, “Given President Putin’s refusal to end this senseless war, Treasury is sanctioning Russia’s two largest oil companies … Treasury is prepared to take further action if necessary to support President Trump’s effort to end yet another war.”

Licenses

Simultaneously with the designations, OFAC issued three Russia-related General Licenses (“GLs”), and amended an existing GL.

• GL 124A: Amends GL 124 (initially issued on May 15, 2025) to authorize transactions involving Rosneft, Lukoil and their blocked subsidiaries related to the Caspian Pipeline Consortium or Tengizchevroil projects. There is no expiration date for this license.
• GL 126: Authorizes transactions ordinarily incident and necessary to the wind down of any transaction involving Rosneft, Lukoil and their blocked subsidiaries, provided that any payment to a blocked person is made into a blocked account. This 30-day license expires at 12:01 a.m., Eastern Standard Time, on November 21, 2025.
• GL 127: Authorizes transactions ordinarily incident and necessary to (a) the divestment or transfer to a non-U.S. person of debt or equity issued or guaranteed by Rosneft, Lukoil and their blocked subsidiaries (“Covered Debt or Equity”), (b) facilitating, clearing, and settling trades of Covered Debt or Equity that were placed prior to 4:00 p.m., Eastern Daylight Time, October 22, 2025, and (c) winding down derivative contracts entered into prior to 4:00 p.m., eastern daylight time, October 22, 2025 that include Rosneft, Lukoil or a blocked subsidiary as a party or are linked to Covered Debt or Equity, provided that any payments to a blocked person in connection with such wind-down are made into a blocked account. This 30-day license expires at 12:01 a.m., Eastern Standard Time, on November 21, 2025.
• GL 128: Authorizes transactions ordinarily incident and necessary to the purchase of goods and services from, or the maintenance, operation, or wind down of, Lukoil retail service stations located outside of the Russian Federation. This 30-day license expires at 12:01 a.m., Eastern Standard Time, on November 21, 2025.

Secondary Sanctions/Designation Risk

• Secondary Sanctions Risk. As a result of the designations, foreign financial institutions (“FFIs”) that continue to do business with or involving Rosneft, Lukoil or their blocked subsidiaries now face secondary sanctions risk pursuant to E.O. 14114, which amended E.O. 14024 to authorize OFAC to target FFIs that conduct or facilitate significant transactions or provide any service involving “Russia’s military-industrial base.” OFAC defines “Russia’s military-industrial base” to mean all persons blocked pursuant to E.O. 14024, which now includes Rosneft, Lukoil and their blocked subsidiaries. Upon determining that an FFI meets the applicable criteria, OFAC may (1) prohibit or impose strict conditions on the maintenance of correspondent accounts or payable-through accounts in the United States for such FFI or (2) impose full blocking sanctions on such FFI.
• This is broader than the secondary sanctions exposure under the Sovereignty, Integrity, Democracy, and Economic Stability of Ukraine Act, as amended (“SSIDES”), that applies to foreign persons due to Rosneft’s and Lukoil’s status as SSI List entities. Exposure under SSIDES arises when OFAC determines that a foreign person has knowingly facilitated a significant transaction or transactions for or on behalf of Rosneft, Lukoil or their subsidiaries. And for a transaction to be “significant” in this context, it must be a transaction that would be prohibited for a U.S. person—i.e., relating to the more limited prohibited activities under the applicable directives.
• Because Rosneft and Lukoil remain SSI List entities in addition to SDNs, non-FFI foreign persons continue to face the secondary sanctions exposure under SSIDES described above. As noted, FFIs are now subject to broader secondary sanctions exposure under E.O. 14024, as amended.

Designation Risk (“Material Support”). As is the case under most OFAC sanctions programs, foreign persons that continue to do business with or involving Rosneft, Lukoil or their blocked subsidiaries risk being designated themselves pursuant to E.O. 14024 for having “materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services to or in support of” a person blocked pursuant to that E.O. On previous occasions, the United States has relied on material support designations to sanction foreign persons involved in high-profile Russian energy projects.