US sanctions Russian oil majors over Ukraine, prompting India jitters and Moscow fury

U.S. President Donald Trump hit Russia's two biggest oil companies with sanctions in his latest sharp policy shift on Moscow's war in Ukraine, prompting global oil prices to rise by 3% on Thursday and India to consider cutting Russian imports.

The sanctions target oil giants Rosneft and Lukoil, which between them account for more than 5% of global oil output, and mark a dramatic U-turn by Trump, who said only last week that he and Russian President Vladimir Putin would hold a summit in Budapest soon to try to end the war in Ukraine.

But Trump, in his latest about-face on the conflict, said on Wednesday that the planned summit was off because it would not achieve the outcome he wanted and complained that his many "good conversations" with Putin did not "go anywhere".

"We cancelled the meeting with President Putin — it just didn't feel right to me," Trump told reporters at the White House. “It didn’t feel like we were going to get to the place we have to get. So I cancelled it, but we’ll do it in the future.”

Russia called the new U.S. sanctions unproductive and signalled that its conditions for ending its war in Ukraine - terms which Kyiv and many European countries regard as tantamount to surrender - remained unchanged.

The conflict raged on as European Union leaders prepared to meet in Brussels on Thursday to discuss funding for Ukraine, with momentum building to use frozen Russian assets to provide a 140 billion euro ($163 billion) loan to Kyiv.

Moscow said it would deliver a "painful response" if the assets were seized.

Russian drones attacked the Ukrainian capital for a second night, injuring nine people, officials said, while Russian air defence forces were reported to have shot down 139 Ukrainian drones and the mayor of Moscow said one drone had been downed en route to the Russian capital.

Unveiling the oil sanctions, Scott Bessent, the U.S. Treasury Secretary, made clear Washington was targeting Russia's ability to fund what has become Europe's biggest land war since World War Two and stood ready to take further action.

"Given President Putin’s refusal to end this senseless war, Treasury is sanctioning Russia’s two largest oil companies that fund the Kremlin’s war machine," Bessent said in a statement. "We encourage our allies to join us in and adhere to these sanctions."

Oil and gas revenue, which is currently down by 21% year-on-year, accounts for around one quarter of Russia's budget and is the most important source of cash for Moscow's war in Ukraine, now in its fourth year.

However, Moscow's main revenue source comes from taxing output, not exports, which is likely to soften the immediate impact of the sanctions on state finances.

Maria Zakharova, a spokeswoman for the Russian Foreign Ministry, shrugged off the likely impact, saying Moscow had developed what she called a "strong immunity" to such restrictions.

Ukrainian President Volodymyr Zelenskiy thanked the United States for the new sanctions, saying they were "very important" but that more pressure would be needed on Moscow to get it to agree to a ceasefire.

Oil prices jumped more than 3% on Thursday amid worries that the sanctions would disrupt global supply. Indian oil industry sources told Reuters that Indian refiners were poised to sharply curtail imports of Russian oil to ensure they were in compliance with U.S. sanctions.

India has become the biggest buyer of seaborne Russian oil sold at a discount after Western nations shunned purchases and imposed sanctions on Moscow over Ukraine.

The U.S. Treasury has given companies until November 21 to wind down their transactions with the Russian oil producers.

Some analysts say that the new sanctions could force Russia to further discount its oil on world markets to offset the perceived risk of U.S. secondary sanctions, but that pain could in turn be mitigated if global oil prices rise supporting the state's finances and the rouble.

After an August summit with Putin in Alaska, Trump dropped his demand for an immediate ceasefire in Ukraine and embraced Moscow's preferred option of going straight to negotiating an overall peace settlement.

But in recent days he has reverted to the idea of an immediate ceasefire, something that Kyiv supports but which Moscow, whose forces are steadily edging forward on the battlefield, has repeatedly made clear it has no interest in.

Russia has said it opposes a ceasefire because it believes it would only be a temporary pause before fighting resumes, giving Ukraine time and space to re-arm at a time when Moscow says it has the initiative on the battlefield.

Russia, which conducted nuclear weapons drills on Wednesday in a show of force, argues that negotiating a full peace settlement that paves the way for what it calls a "long-lasting peace" is therefore a better option.

But Kyiv has said that Russia's conditions for a settlement - which would entail Ukraine handing over more land - were unacceptable and, in effect, a demand for it to surrender.

Zakharova, the Russian foreign ministry spokeswoman, said the sanctions bore "an exceptionally counterproductive character" when it came to trying to find a negotiated solution.