Trump’s sanctions on Russia just scored their biggest win yet. Lukoil, Russia’s second-biggest oil company, is dumping all its international assets to a Swiss trading firm called Gunvor.
We’re not talking about one refinery or a couple gas stations. Lukoil owns oil projects in 11 countries, refineries in Bulgaria and Romania, a 45% stake in a Netherlands refinery, and retail fuel chains across Europe. They’re selling all of it.
The kicker? They’re probably getting fire-sale prices. Some analysts think Lukoil might accept a discount of up to 70% just to get the deal done before the sanctions deadline. That means a portfolio worth maybe $10-12 billion could sell for as little as $3 billion.
That’s what happens when you’re desperate and everyone knows it.
What Actually Triggered This Sale
Last week, Trump dropped sanctions on Lukoil and Rosneft – Russia’s two biggest oil producers. These weren’t symbolic sanctions. They were the real deal.
The sanctions freeze all Lukoil assets in the US and ban American companies from doing business with them. But the real pain comes from secondary sanctions on any foreign bank that processes transactions for Lukoil.
Banks have a choice: deal with Lukoil, or deal with the US financial system. Not both. And guess which one every major bank is going to pick?
Without access to international banking, Lukoil can’t move money. They can’t get paid for oil shipments. They can’t operate refineries outside Russia. Their international business basically stopped working overnight.
So they had to sell. Fast.
The US Treasury gave companies until November 21 to wind down business with Lukoil. That’s three weeks from the sanctions announcement. Lukoil said they’ll ask for an extension if needed, but everyone knows they have zero leverage here.
Who's Buying Everything?
Gunvor Group is the buyer. They’re a Swiss-based commodity trading firm that most people have never heard of, but they’re huge in the oil world.
Here’s where it gets interesting. Gunvor was co-founded by Gennady Timchenko, who just happens to be one of Putin’s oldest friends. They met in the 1990s in St Petersburg before Putin became president.
Timchenko sold his 43.5% stake in Gunvor back in 2014 when the US hit him with personal sanctions after Russia annexed Crimea. He claimed he was planning to sell anyway and the sanctions had nothing to do with it. Sure, Gennady. Whatever you say.
His former business partner Torbjörn Törnqvist now owns about 85% of Gunvor. The company posted $136 billion in revenue last year and made $700 million in profit. They’ve been on a buying spree, using profits from the oil price rally to acquire refineries, pipelines, and fuel chains globally.
So Lukoil’s international assets are going from one Russian-connected company to another Russian-connected trading house. Just with a Swiss address instead of a Moscow one.
That’s convenient.
Trump's Trying to End the War
The sanctions on Lukoil and Rosneft are Trump’s first major move against Russia since taking office. He’s been talking with Putin about ending the war in Ukraine, but those talks aren’t going anywhere.
Trump got frustrated that Russia wasn’t backing down, so he hit them where it hurts – their oil exports. Lukoil and Rosneft together account for almost half of Russia’s crude exports. Oil revenues are critical for funding Russia’s military operations.
The goal isn’t to completely stop Russian oil from flowing. That would spike global prices and hurt everyone. The strategy is to make Russia’s oil trade “harder, costlier and riskier” as one White House official put it.
Force Russian oil companies to sell at bigger discounts. Make shipping more expensive. Scare off banks from processing payments. Gradually squeeze Russia’s oil revenues without causing a supply crisis.
Based on Lukoil’s fire sale, the strategy’s working.
