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Economics

Why Sanctions Won't Stop U.S. Oil Drilling in Russia

Newly closed loopholes will halt Arctic oil exploration, but they leave existing wells flowing
Why Sanctions Won't Stop U.S. Oil Drilling in Russia
Photo illustration by 731; Photographs courtesy Rosneft (ship); Suresh Krishna/Getty Images (iceberg)

When the White House, working with European allies, moved in early September to tighten sanctions against Russia, President Obama promised the damage to Russian interests would be severe. “These measures will increase Russia’s political isolation as well as the economic costs to Russia, especially in areas of importance to President Putin and those close to him,” Obama said in a statement on Sept. 11.

The rules gave U.S. companies engaged in Arctic, deepwater, or shale oil exploration and production in Russia 14 days to halt operations. One project was immediately affected: Universitetskaya-1, the $700 million joint exploration project that Rosneft, the Russian state-owned oil company, is developing in the Arctic with ExxonMobil.