A Lukoil sign is seen at Abu Dhabi International Progressive Energy Congress (ADIPEC), in Abu Dhabi, United Arab Emirates, October 2, 2023. REUTERS/Amr Alfiky
The logo of Rosneft company is seen on a LADA Sport Rosneft racing car at the factory museum of Russian automobile manufacturer AvtoVAZ in the city of Togliatti, Russia, August 30, 2023. REUTERS/Alexander Manzyuk

By Timothy Gardner and Daphne Psaledakis

WASHINGTON (Reuters) -U.S. President Donald Trump on Wednesday imposed Ukraine-related sanctions on Russia for the first time in his second term, targeting oil companies Lukoil and Rosneft as his frustration grows with Russian President Vladimir Putin over the war.

The U.S. Treasury Department said it was prepared to take further action as it called on Moscow to agree immediately to a ceasefire in Russia's war in Ukraine, which began in February 2022.

"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," Treasury Secretary Scott Bessent said in a statement. "We encourage our allies to join us in and adhere to these sanctions."

The sanctions are a major policy shift for Trump, who had not put sanctions on Russia over the war and instead relied on trade measures. Trump imposed additional 25% tariffs on goods from India in retaliation for it purchasing discounted Russian oil.

The U.S. has not imposed the tariffs on China, another major buyer of Russian oil. A $60 price cap on Russian oil imposed by Western countries after Russia's invasion has shifted Russia's oil customers in recent years from Europe to Asia.

Trump told reporters in the Oval Office on Wednesday he had canceled a planned summit in Hungary with Putin because it didn't feel like it was the right time.

Trump also said he hopes the sanctions on Russian oil companies will not need to be in place for a long time. Trump said last year that he likes to remove sanctions quickly because of the risks to the dominance of the dollar in global oil transactions that the measures can bring. Russia has often asked for payments in other currencies.

'CAN'T BE ONE AND DONE'

Trump's measure on Wednesday followed Britain's sanctioning of Rosneft and Lukoil last week.

Analysts said the measures were a big step but long overdue.

"This can't just be one and done," said Edward Fishman, a former U.S. official who is now a senior research scholar at Columbia University. He said the question will be whether the U.S. now threatens sanctions on anyone doing business with Rosneft and Lukoil.

Jeremy Paner, a former sanctions investigator at the Treasury Department and now a partner at law firm Hughes Hubbard & Reed, said the absence of banks and Indian or Chinese oil purchasers in Wednesday's sanctions "will not get Putin’s attention."

A senior Ukrainian official, however, said the step was “great news” and that the two Russian energy companies were among U.S. sanctions targets proposed by Kyiv in the past.

The Russian embassy in Washington and the Russian mission to the United Nations in New York did not immediately respond to a request for comment on the sanctions.

(Reporting by Timothy Gardner and Daphne Psaledakis, additional reporting by Jasper Ward, Kanishka Singh Daphne Psaledakis, Ismail Shakil and Michelle Nichols; Editing by Leslie Adler and Daniel Wallis)