US sanctions on Rosneft and Lukoil up the ante

On the face of it, the announcement of sanctions by the US on Rosneft and Lukoil is a major escalation in the targeting of Russia’s energy sector and could be a big enough shock to flip the global oil market into a deficit next year. That said, the lasting impact on the oil market and oil prices will depend on how long any sanctions remain in place, and how effectively they are enforced. As for Russia itself, the hit to energy revenues could tip the economy into recession. But in the near term at least, it’s not clear that economic pressure will change Putin’s stance on the war in Ukraine.