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On October 22, 2025, the U.S. Department of the Treasury, Office of Foreign Assets Control (“OFAC”) imposed blocking sanctions on Russia’s two largest oil producers, Open Joint Stock Company Rosneft Oil Company (“Rosneft”) and Public Joint-Stock Company Oil Company Lukoil (“Lukoil”), pursuant to Executive Order 14024 (“E.O. 14024”). Concurrently, and in the subsequent weeks, OFAC also issued several general licenses authorizing certain transactions with Rosneft, Lukoil, and certain subsidiaries, including negotiations and entry into an agreement for the divestment of certain Lukoil international assets, contingent on OFAC approval.

Rosneft and Lukoil Designations

As a result of the designations, Rosneft, Lukoil, and over 30 of their subsidiaries are now included in the list of Specially Designated Nationals and Blocked Persons administered by OFAC. Accordingly, U.S. persons are prohibited from directly or indirectly engaging in any transactions or other dealings with or involving the designated entities, as well as any entities in which they directly or indirectly hold a 50% or greater ownership interest. In addition, any property in which such entities have an interest that is in the possession or control of U.S. persons or located in the United States is blocked as a matter of law and U.S. persons generally are prohibited from engaging in transactions or other dealings involving such property. Non-U.S. persons also are prohibited from “causing” U.S. persons to violate U.S. sanctions restrictions, including by causing U.S. persons to engage in direct or indirect transactions or other dealings with or involving the designated entities.     

The designations follow the reported standstill in U.S.-Russia diplomatic efforts to negotiate an end to the Ukraine conflict, and represent the first OFAC sanctions targeting Russia under the current Trump administration. Coupled with the January 2025 sanctions imposed by President Biden against Gazprom Neft and Surgutneftegas, the October 22, 2025 designations resulted in Russia’s top four largest oil companies being subject to U.S. blocking sanctions. 

General Licenses

Given the significant international operations of Rosneft and Lukoil, and reports of operational challenges for a number of counterparties, countries, and local energy markets following the designations, OFAC has issued and amended a number of general licenses (“GL”) authorizing certain activities relating to Lukoil, Rosneft, and certain subsidiaries: 

  • GL 124B – Caspian Pipeline Consortium, Tengizchevroil, and Karachaganak Projects. GL 124B amends existing General License 124A to authorize certain transactions involving Rosneft and Lukoil related to the Caspian Pipeline Consortium, Tengizchevroil, and Karachaganak Projects, three ongoing pipeline projects in Kazakhstan. GL 124B does not have an expiration date.
  • GL 126 – Authorizing the Wind Down of Transactions Involving Rosneft or Lukoil. GL 126 authorizes certain wind-down transactions related to Rosneft and Lukoil and any entity 50% or more owned by Lukoil. Under GL 126, transactions otherwise prohibited by E.O. 14024 that are ordinarily incident and necessary to the wind down of any transaction involving Rosneft or Lukoil or its subsidiaries are authorized until November 21, 2025, provided that any payment to a blocked party is made into a blocked account.
  • GL 127 – Authorizing Certain Transactions Related to Debt or Equity of, or Derivative Contracts Involving, Rosneft or Lukoil. GL 127 authorizes U.S. persons to divest or transfer debt or equity issued or guaranteed by Rosneft or Lukoil to non-U.S. persons, and authorizes transactions ordinarily incident and necessary to the wind down of derivative contracts entered into prior to October 22, 2025 provided that any payments to a blocked party are made to a blocked account. Transactions covered under GL 127 are authorized until November 21, 2025.
  • GL 128A – Authorizing Certain Transactions Involving Lukoil Retail Service Stations Located Outside of Russia. 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 Russia. For purposes of GL 128A, Lukoil retail service stations are limited to physical retail service stations located outside Russia and in existence on or before October 22, 2025 in which (1) Lukoil has an interest, or (2) any entity in which Lukoil owns, directly or indirectly, a 50% or greater interest, has an interest. Transactions covered under GL 128A are authorized until December 13, 2025, provided that any payment, directly or indirectly, to a blocked person, other than blocked Lukoil retail service stations, is made into a blocked account.
  • GL 129 – Authorizing Transactions Involving Rosneft Deutschland GmbH and RN Refining & Marketing GmbH. GL 129 authorizes transactions involving two Rosneft German subsidiaries, Rosneft Deutschland GmbH (RN Germany) and RN Refining & Marketing GmbH (RN Refining & Marketing), or any entity in which RN Germany or RN Refining & Marketing own, directly or indirectly, individually or in the aggregate, a 50% or greater interest. Transactions covered under GL 129 are authorized until April 29, 2026.
  • GL 130 – Authorizing Transactions Involving Certain Lukoil Entities in Bulgaria. GL 130 authorizes transactions involving certain Lukoil Bulgarian subsidiaries, Lukoil Neftohim Burgas JSC, Lukoil Bulgaria EOOD, Lukoil Aviation Bulgaria EOOD, Lukoil Bulgaria Bunker EOOD, or any entity in which one or more of such entities own, directly or indirectly, individually or in the aggregate, a 50% or greater interest. Transactions covered under GL 129 are authorized until April 29, 2026.

In addition to the above, on November 7, 2025, the White House confirmed that the U.S. government granted an exemption to Hungary for the purchase of Russian oil and gas (few details are publicly available as of the date of this post). 

Lukoil Divestment

Notwithstanding the various general licenses issued to date, a more permanent solution remains unresolved for a number of international Lukoil assets, including refineries in Bulgaria, Romania, and the Netherlands; retail fuel stations located in well over a dozen countries; and upstream assets located across the Middle East (Iraq, UAE, and Azerbaijan), Central Asia (Kazakhstan and Uzbekistan), Africa (Egypt, Cameroon, Nigeria, Ghana, and the Congo), and Mexico. Although Geneva-based Gunvor Group and Lukoil announced a proposed acquisition of Lukoil’s international assets subject to regulatory approvals, the U.S. Treasury announced shortly thereafter that it would not issue a license for the transaction.        

On November 14, 2025, OFAC issued GL 131, authorizing transactions ordinarily incident and necessary to the negotiation of and entry into contracts with Lukoil or any of its affiliates for the sale, disposition, or transfer of Lukoil International GmbH (“LIG”, an Austrian holding company for a number of international Lukoil assets) or any entity in which LIG owns, directly or indirectly, individually or in the aggregate, a 50% or greater interest, provided that the performance of any such contract is made expressly contingent upon the receipt of separate authorization from OFAC. In addition, GL 131 authorizes transactions ordinarily incident and necessary to the maintenance or wind down of operations, contracts, or other agreements of LIG Entities, provided that any payment, directly or indirectly, to LIG Entities or any other blocked person is made into a blocked account. Transactions covered under GL 131 are authorized until December 13, 2025.

In newly issued guidance, FAQ 1224, OFAC further clarified that activities authorized under GL 131 include negotiations on terms for definitive agreements and financial, legal, or operational due diligence, including engagement of outside counsel or advisors. Notably, FAQ 1224 further states that, in determining whether to approve a proposed divestment, Treasury will consider factors supporting U.S. national security and foreign policy objectives, including whether the transaction “completely severs ties with Lukoil; blocks funds owed to Lukoil until sanctions are lifted; and does not provide a windfall to Lukoil.” In addition to OFAC approval, any divestment may further require regulatory approvals by antitrust and foreign direct investment authorities across local jurisdictions.   

Significance and Developments

In addition to primary U.S. sanctions restrictions on Rosneft and Lukoil, parties should consider potential “secondary sanctions” risks associated with continued transactions or other dealings with or involving Rosneft and Lukoil (as well as their 50% or more owned subsidiaries). The U.S. government has significant discretion to impose secondary sanctions against non-U.S. persons determined to engage in certain targeted activities, including the provision of material assistance or support to blocked parties such as Lukoil and Rosneft, or, in the case of foreign financial institutions, conducting or facilitating any “significant” transactions for or on behalf of, or providing services to, sanctioned parties (see our previous discussion linked here).  

The sanctions and threatened Congressional action against Lukoil and Rosneft represent a significant escalation in U.S. economic pressure on Russia’s energy sector and raise substantial compliance and secondary sanctions challenges for international companies and financial institutions. Further sanctions are possible, particularly in light of U.S. Secretary of the Treasury Scott Bessent warning in connection with announcing the October 22, 2025 sanctions that Treasury was prepared to take additional action in order to compel an end to the conflict in Ukraine, and renewed bipartisan congressional interest in moving forward a Russia sanctions bill authorizing the U.S. President to impose secondary sanctions and tariffs on countries that continue to purchase Russian oil. The Sanctioning Russia Act of 2025, for example, introduced in April 2025 in the Senate and House, would authorize the imposition of a number of sanctions as well as tariffs of 500% or greater on goods imported into the United States from Russia or from any country determined to knowingly sell, supply, transfer, or purchase Russian-origin oil, uranium, natural gas, petroleum products, or petrochemical products. 

Cleary’s international trade and sanctions team continues to monitor developments in this area and is available to provide guidance with respect to navigating the evolving sanctions landscape.