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- More Russian sanctions could follow under the Trump administration.
- "I will be 100% on board with taking sanctions up," Treasury Secretary-pick Scott Bessent said Thursday.
- Sources told Bloomberg that a sanctions strategy is under discussion.
The strategy of applying pressure on Russia to end the war in Ukraine by hitting its energy industry with sanctions could continue with the next presidential administration.
On Thursday, Donald Trump's pick for Treasury Secretary, Scott Bessent, made the readiness to bring more sanctions plain.
"I will be 100% on board with taking sanctions up — especially on the Russian oil majors — to levels that would bring the Russian Federation to the table," Scott Bessent told the Senate Finance Committee during a confirmation hearing.
Though Trump hasn't publicly endorsed the strategy, the president-elect has long pledged to bring a quick end to Russia's war in Ukraine. So far, Moscow has reacted negatively to peace plans touted by Trump last year, predicated on delaying Ukraine's admission to NATO.
Sources told Bloomberg this week that the next administration is discussing two approaches. On the one hand, the White House may recommend good-faith measures to help Russia's oil producers if a peace deal looks likely. Alternatively, Trump might choose to amplify sanctions pressure with deeper restrictions.
The second option would build on a sanctions regime that was started and grew under Biden. Since the outbreak of the war in 2022, the US and its allies have progressively tightened the screws on Russia's oil industry, a sector that is vital to the country's economy.
"President Trump has repeatedly stated that a top priority in his second term will be to quickly negotiate a peaceful resolution to the Russia-Ukraine war," Karoline Leavitt, a spokesperson for the president-elect's transition team, told Business Insider when asked about the plans for more sanctions.
Just ahead of Biden's departure, Washington unleashed an especially disruptive sanctions package, targeting 183 Russian vessels, as well as insurance providers and oil companies Gazprom Neft and Surgutneftegaz. Individual oil traders and energy leaders were also targeted.
Bessent, who described Biden's sanctions as "not fulsome enough," suggested that the administration hadn't pursued a policy of this magnitude during the election season over fears of higher prices.
But the same worry could haunt the next administration. After the new measures were enacted, global oil prices spiked to a six-month high this week. Brent crude, the international benchmark, topped $82 per barrel.
"Trump, like Biden, would prefer to keep oil prices low and avoid potential inflation catalysts. We continue to believe that with US oil supply growth moderating and GCC countries unlikely to offset lost Iranian, Venezuelan, or Russian output, any policies that might raise oil prices will likely take a backseat to Trump's key objective of maintaining low energy prices," JPMorgan wrote following the announced sanctions package.
At the same time, analysts from FxPro noted that Trump may continue the sanctions policy as a way to benefit US producers. In November, Republican Senator Bill Hagerty told CBS that US policy toward Moscow should remove its energy flows from the equation, giving room to US production.
He suggested that the current $60 price cap on Russian barrels wasn't enough. According to JPMorgan, the Trump team has considered renegotiating the cap to $40.
Some analysts are skeptical that sanctions would lead to lasting inflation pressures. While the latest package sparked a price disruption that will take time to dissipate, the global oil market is navigating a supply surplus and tepid demand. Research firm Capital Economics expects prices to be near $70 per barrel at the end of the year, about 13% lower than levels on Friday.
Sources told Bloomberg that the decision will ultimately lie with the President-elect. But what's more certain is that current sanctions are unlikely to be reversed anytime soon. New measures on Wednesday now require the president to notify Congress if attempting to ease sanctions.
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