Trump demands: cheap oil for peace! Can the US hit Russia?

US President Donald Trump announced on January 23rd at the World Economic Forum in Davos that he would ask Saudi Arabia and OPEC to lower oil prices. Trump said falling oil prices could end the Ukraine war “immediately.” India plays a key role in this, importing 1.6 million barrels of crude oil per day from Russia since 2021 - an amount that has increased almost a thousandfold. A decline in these imports could significantly hit the Russian economy, as India accounts for around 40% of Russia's crude oil exports.

Trump could aim for India to buy oil from the US, which could cost Russia a whopping $108 billion in revenue. CEPA proposes that the US offer favorable sales terms or “bundle deals” to attract India to such a transition. Indian companies do not buy Russian oil for ideological reasons, but because of the attractive pricing. Additionally, the US increased its oil production to a record 12.9 million barrels per day, while Saudi Arabia canceled plans to increase production capacity to 13 million barrels per day.

Consequences of the sanctions

In parallel, the US has adopted a new package of sanctions against Russia aimed at combating the “shadow fleet” that evades Western oil embargoes. These sanctions are intended to reduce Russia's oil revenues, which are used to finance the war in Ukraine. According to a report by tagesschau.de Oil prices rose to their highest level in months, with Brent oil at $81.50 per barrel. The US Treasury Department has sanctioned 183 oil tankers that are part of the “shadow fleet,” also affecting two major Russian oil companies: Gazprom Neft and Surgutneftegas.

Of the sanctioned ships, 143 transported more than 530 million barrels of Russian crude last year, accounting for 42% of sea exports. The main buyers are China and India. The Russian government has criticized the sanctions as distorting competition and destabilizing the market. Kremlin spokesman Dmitry Peskov said that sanctions cannot stop the energy routes.

Rising oil prices from the Middle East, Africa and Brazil are a result of increasing demand from China and India. If Russian supply falls, this could also have an impact on heating oil and fuel prices in Germany. While Russia received more revenue from oil and gas sales in 2024, equivalent to 11.13 trillion rubles (107 billion euros), 2023 saw a 24% decline in revenue due to lower oil prices and falling gas exports. Oil and gas sales are a key source of revenue for the Russian state budget, accounting for one-third to one-half of total revenue.