The Trump administration is signalling a significant escalation in its economic war against Russia, including a new willingness to aid Ukrainian attacks on Russian energy facilities, according to a new analyst note from RBC.
RBC, citing recent conversations with senior Trump administration officials, said it "sensed a heightened urgency" in Washington to curb the flow of funds affording Russia a "massive manpower advantage over Ukraine."
This urgency is reportedly driven by "stark warnings" from leading U.S. military experts. RBC's note states these experts believe that "unless war funding dynamics change," Russian forces could push as far as the Dnieper River within a year, forcing the Zelenskyy government to "evacuate Kyiv."
In response, administration officials expressed a willingness to not only "implement stronger sanctions on oil," but also to "aid Ukraine's ongoing attacks on Russian energy facilities"—a move that would mark a significant and direct escalation.
RBC analysts suggest the recent slide in oil prices is likely "viewed as providing an opportune window" for the White House to take more aggressive action against Russian exports, given that midterm elections are still more than a year away.
However, the bank highlights the considerable risk of this strategy, noting that any new disruptive "actions come as OPEC spare capacity has been steadily drawn down since April." This implies the global market has a significantly reduced buffer to absorb a major shock to Russian energy supply.
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The primary market impact of this development is a significant increase in the geopolitical risk premium for crude oil. RBC's note suggests the market is under-pricing the risk of a major, deliberate supply disruption. While recent price slides provide a "window" for this action, the report's warning that OPEC spare capacity has been "steadily drawn down" implies the global market has a minimal buffer to handle the loss of Russian supply. Traders will now have to price in the heightened probability of Ukrainian attacks succeeding with US aid, which could remove millions of barrels of Russian oil and products from the market, potentially leading to a price rise.
