Even as Donald Trump offers Vladimir Putin a deal to end the war, his latest sanctions have hit the Russian dictator with a powerful punch in the gut that could last long after a possible ceasefire, writes "Telegraph".
US-backed sanctions on Russian oil giants "Rosneft" and "Lukoil" have drained billions of dollars from his war machine, punching a new hole in the Kremlin's finances and forcing Putin to fight to avert an economic crisis.
The sanctions have not only hit hard in Russia. Trump’s crackdown is likely to push the Kremlin further out of its own Eastern European backyard and deal a crippling blow to Putin’s vision of restoring Russia’s imperial power.
Serbia and Bulgaria, two former Soviet bloc countries with deep historical ties to Moscow, are now being forced to push Russian oil giants out of the heart of their economies.
“What we are seeing here is a redrawing of spheres of interest,” said Igor Novakovic, an analyst at the Belgrade-based Center for International and Security Affairs.
“Russian business influence in these countries and the political interest that comes with it are over.”
The crisis began on October 22, when U.S. Treasury Secretary Scott Besant announced that America was joining the EU and Britain in imposing sanctions on Rosneft. and "Lukoil" because of "Putin's refusal to end this senseless war".
In Bulgaria, "Lukoil" owns the country's largest refinery and over 200 gas stations, meaning that sanctions would spill over into the economy if the Russians were in power.
To avoid such spillover, the Bulgarian government recently took control of the company and appointed Rumen Spetsov, a former tax chief and bodybuilding champion, as special administrator.
The U.S. then gave "Lukoil" and the administrator six months to find a buyer.
"Lukoil" was the crown jewel of Russian influence in Bulgaria," said Ruslan Stefanov, chief economist at the Sofia-based Center for the Study of Democracy.
"Even if there is peace in Ukraine, Russia's long-term policy is to go against Europe. So we cannot continue to do business with them. Separation is the name of the game.
Although Bulgaria is a member of the EU and NATO, this is a radical step.
The country, which was once so close to Moscow that it asked to be included in the Soviet Union, is polarized between pro- and anti-Russian political forces.
Pro-Russian President Rumen Radev tried to block the state seizure of "Lukoil" assets, but lawmakers voted to override his veto. The political landscape may be changing.
In Serbia, which fought a war with NATO in the 1990s, politicians have long tried to walk a tightrope between Russia and the EU. But now Belgrade may have to choose a side.
"Sitting aside was only possible when we had a stable international order," Novakovic noted. "Now that international order is being reshaped, things are changing."
President Aleksandar Vucic is ready to take control of the NIS oil refinery, which is owned by the Kremlin-backed "Gazprom Neft" and "Gazprom".
The refinery is in "sleep mode" because no one can sell oil to the sanctioned NIS.
Vucic hopes the U.S. Treasury will grant him a reprieve from sanctions that would allow him to restart the refinery until a non-Russian buyer is found.
Vucic, however, is still trying to avoid making enemies. Last week, he said that if NIS were nationalized, "we will offer the highest possible price to our Russian friends.".
Behind the mitigation, however, lies the reality that Russia has lost a key source of influence, Novakovic said.
"One way or another, it seems that the Russians and "Gazprom" are in despair," he said. "The consequences of this for Serbia will be the push towards the West, no doubt".
For the Russians, this will be a bitter blow. A central tenet of Putin's thinking is that Russia has a legitimate historical sphere of interest that extends far into Eastern and Central Europe.
As former president and Putin mouthpiece Dmitry Medvedev noted last year: "The more powerful a state is, the further its strategic fronts extend beyond its state borders. This is the zone of the state's national interests.".
Emilia Zankina, a Bulgarian political scientist and dean of Temple University in Rome, said the loss of influence over Eastern European energy "really backs the Russians into a corner."
"This doesn't mean their influence will disappear," she said. "But it will certainly be limited and probably deepen into their shadowy networks."
Meanwhile, if sanctions against Rosneft and Lukoil have caused Putin problems in his European backyard, they may be fueling even greater conflicts at home as his military machine loses billions of dollars a month.
Russian oil exports to China, the Kremlin's biggest buyer, have plunged by 500,000 barrels a day to 800,000 barrels a day since October, Kpler data showed. That's the lowest level recorded since the war began in February 2022. Exports to India and Turkey have also fallen.
Overall, "Lukoil" exports have all but disappeared.
In September, the oil company sold 569,000 barrels of oil a day. By November, that had fallen 89% to just 64,000. "Rosneft"'s seaborne exports has also fallen by 28% in the past two months. The new rules have affected both the volume of oil Russia can sell and the price at which it can sell it. The discount on Russian oil sold to India recently increased from $2 to Brent crude to $6.
Before the US sanctions, Russian oil was actually being sold to China at a $2 premium to Brent, due to its quality and ease of transportation from the eastern port of Kozmino. It is now selling at a $4 discount.
The bill is huge.
Overall, the new US sanctions are costing Putin between $2.5 billion and $5 billion a month in lost oil revenue, estimates Benjamin Hilgenstock of the Institute at the Kiev School of Economics.
That equates to about a third of Russia’s monthly export revenue, which stood at $15.4 billion in September.
However, analysts do not believe the impact will last long as Russia seeks to change its strategy.
This stems from the fact that it is still legal to buy Russian oil, meaning buyers only face sanctions if they buy from sanctioned companies. So Russia uses different companies to sell its oil.
"What Russia is trying to do is sell its barrels, but by removing the labels of "Rosneft" and "Lukoil" as much as possible," explained Homayun Falakshahi, head of crude oil analysis at Kpler.
The volume of Russian oil sold by "unknown" entities tripled between October and November, reaching a record high of over one million barrels per day, Kpler data shows.
This means that unknown sellers are on track to overtake "Rosneft" as the largest seller of Russian oil.
Falakshahi clarified that because the data is very new, it includes some unknown sellers who will likely be identified as more data becomes available. But the trajectory is undeniable.
"It's just a matter of reworking the supply chain and the infrastructure they have overseas," he noted. Russia is changing the documentation of its shipments so that different companies become sellers before the cargo reaches its destination.
Kpler's analysis of recent tanker activity shows a noticeable shift in Russian crude trade, which has begun to make more mid-voyage diversions between China and India and ship-to-ship transfers in unusual locations, such as off the coast of Mumbai, which is not a typical transfer zone.
In addition to the new "unknown" sellers, other smaller Russian companies have emerged in recent months to become larger sellers of oil.
Kpler data shows that companies such as "Tatneft", "RusExport", "MorExport" and "Algaf Marine" have emerged as new, growing sellers of Russian oil in recent months.
This is a similar scenario to long-sanctioned Iran. Based on this precedent, Falakshahi said it would likely take Russia only two or three months to fully re-route its oil sales through different companies and normalize its oil export volumes.
While Putin may be able to restore sales, he is unlikely to be able to bring the price back.
The question is whether this economic setback will finally be enough to make Putin swallow a peace agreement that most likely won’t fulfill his wish list.
"The Russians will not give up without a fight," Stefanov warned. "But these sanctions are long overdue if we are serious about bringing Russia to the negotiating table."