Trump is playing a dangerous game with Russian energy

One of the most remarkable outcomes to follow the full-scale invasion of Ukraine in 2022 was the speed at which Europe cut its longstanding energy ties with Russia. Isolating and damaging Moscow’s energy sector — via import bans, price caps, targeted sanctions, and military strikes on oil infrastructure — has up to now been a core strategy of Ukraine and its Western allies in economically countering the invasion. And although Russia has proven adept so far at evading sanctions — its “shadow fleet” of hundreds of tankers with questionable papers now transports 80% of its oil exports — it is forced to sell many of its products at a discount and has been stymied in building new liquefied natural gas export terminals. The isolation push also represented a deepening of the US-Europe alliance, a sign that the energy transition could create opportunities to shake off the fossil fuel leverage that Russia has exploited for decades.

The Kremlin is carefully appealing to Trump’s fixation on good deals, offering oil and gas as a shiny object more tangible and valuable than the democratic principles that have underpinned US support for Ukraine up to now. But to suddenly normalize energy relations with Russia, rather than step up enforcement of existing sanctions, would be a huge gamble that could easily backfire, both for Trump’s desire to be known as a peacemaker and for the US energy sector.

Russia’s energy isolation was a windfall for China and India, which have been eager to snap up cheaper oil and gas. But perhaps the biggest winner was the US, which found in Europe an incredibly lucrative new market for LNG. Cutting Russian oil out of key segments of the global market was also a boon for US producers. And if US oil companies are staying away from operating in Russia, as most have been since the full-scale invasion of Ukraine, it’s at least as much because of the sketchy investment climate there as because of sanctions. Russia would benefit from the money, equipment, and technical expertise of US companies in developing tough Arctic drilling projects.

“Allowing US oil companies to go back into Russia would be a concession to Putin, not a concession to Trump,” said Edward Fishman, senior research scholar at Columbia University’s Center on Global Energy Policy and author of Chokepoints, a forthcoming book on economic warfare. “If Trump truly wants energy dominance, he’s not going to get that by flooding the market with more Russian crude oil.”

To even put the lifting of sanctions on the table this early could imply to Putin that he needs to concede very little in exchange for the withdrawal of US support for Ukraine. And to condition the lifting of sanctions only on an end to the conflict in its current position, rather than on the return of at least some occupied Ukrainian territory, would be a major step back from the Biden administration’s position.

Biden weakened his own negotiating position just before the full-scale invasion by agreeing to lift sanctions on the Nord Stream 2 pipeline before his own meeting with Putin, said Andriy Kobolyev, the former CEO of Ukraine’s state-owned gas company Naftogaz. “Putin read that sign very clearly as a weakness,” he said. “That problem has been haunting us for many years. Everything that happened later was to a significant extent promoted by this mistake.” The “acid test” for Trump, Kobolyev said, is whether he will repeat the same mistake.

Congress blocked Trump from lifting sanctions on Russia during his first term, and could do so again through the same law, but would require a supermajority in both chambers to do so. That would turn sanctions into an important test of the distance between Trump and mainstream Republicans on hawkishness toward Russia, and of GOP lawmakers’ willingness to fall in line behind the president.

However, lifting sanctions may not even be necessary, said Clayton Seigle, senior fellow in the Energy Security and Climate Change Program at the Center for Strategic and International Studies. Even if Trump was inclined to ramp up sanctions enforcement, mass layoffs at the Treasury Department will make that much more difficult.

“All Washington would need to do in order to ease the burden for Moscow is avoid strict enforcement,” Seigle said. “This would be highly ironic since Trump and supporters had accused the Biden administration of just such lax enforcement of oil sanctions on Iran, but worth watching given the direction of travel.”

US oil companies so far have shown no interest in taking Moscow up on its offer. US shale companies, which can set up and dismantle drilling operations rapidly, would probably be the easiest to tempt back to Russia, said Jim Krane, research fellow at Rice University’s Baker Institute. For everyone else, the risk probably isn’t worth the upside, especially with oil prices already relatively depressed.

“You’d have to be a pretty cavalier player to contemplate returning to Russia under Putin,” he said. “Russia’s record of political interference, asset seizures, and outright expropriation is long and well-documented. The cases are myriad and the losses are breathtaking.”

If Trump walks back US sanctions, it will test Europe’s willingness and ability to maintain its own. Hungary, and the far-right leaders poised to take power in Germany, could be happy to welcome Russian gas back into the market. The EU introduced a new package of Russia sanctions on Wednesday, but cracks in the bloc could emerge when the measures come up for formal adoption next week, Seigle said. Meanwhile, US alignment with Russia could also splinter a plan in the G7 to tighten the price cap on Russian oil exports.