Russian stocks continued to plunge on Monday, fueling fears of a major financial crisis following Donald Trump's swinging new sanctions. The Kremlin has been rocked by the White House's decision last week to target its two largest oil companies in the latest sanctions package.
Rosneft and Lukoil have seen their assets frozen in the US, while Washington has also banned American companies and individuals from doing any business with them. In a further sting, the White House is threatening secondary sanctions on foreign financial institutions that cut deals with the Russian companies. The sanctions are likely to have a major impact on the Kremlin's ability to fund its grinding war in Ukraine.
Oil and gas revenue accounts for up to a quarter of Russia's budget and is the most important source of cash for Moscow's military campaign. Already firms in Russia's key energy markets in China and India have paused their purchases of the Kremlin's crude oil.
In an act of desperation, the Kremlin dispatched their economic envoy Kirill Dmitriev to plead with the Trump administration to rescind its punitive measures.
However, the envoy appeared to come away empty handed, provoking fresh turmoil on Russia's stock exchange.
On Monday, stocks plummeted another 3.2% by 2:50pm Moscow time, having previously lost 6.5% last week.
Geopolitical uncertainty remains the main driver of the sell-off, said investment banker Yevgeny Kogan.
“There's no light at the end of the tunnel. The 'peacemakers' have achieved nothing, and the situation is close to a dead end,” he wrote.
Lukoil and Rosneft shares led the sell-off as panicking investors scrambled to save their investments.
Rosneft fell by 5.6% to 368.4 rubles, their lowest since March 2023. Lukoil dropped by 6.5% after plunging 12.2% last week, with its stock briefly touching 5,242 rubles, the lowest since July 2023.
The two oil giants have lost more than 900 billion rubles (£8.5 billion) in combined market capitalization since the sanctions were introduced.
Together they account for nearly half of Russia's crude oil exports, according to Bloomberg.