The election of Donald Trump for a second term as President of the United States is being met with more apprehension in Moscow compared to his first victory in 2016. There are no positive signs for a second Trump administration, especially from an economic standpoint. Despite Trump’s promises to possibly lift sanctions on Russia and Iran to maintain the U.S. dollar as the leading reserve currency, the likelihood of this happening appears slim. In his first term, Trump failed to ease pressure on Moscow, leading to even tighter sanctions imposed by Congress over his head with the Countering America’s Adversaries Through Sanctions Act.
The idea that Trump would lift sanctions now, particularly with the ongoing Russia-Ukraine war and the resources being expended to aid Kyiv, is seen as wishful thinking even among the Kremlin’s strongest supporters. While Trump has the legal authority to make exceptions to existing sanctions, bipartisan support in Congress for Russia-related restrictions and commitment to supporting Ukraine could thwart any attempts by Trump to ease sanctions. Lawmakers have shown criticism towards Russia’s invasion of Ukraine and a desire for tougher sanctions against Moscow. Additionally, Washington and Brussels have increased pressure on Russia’s LNG industry, impacting projects like Arctic-2 LNG.
Russia faces challenges from the U.S. becoming Europe’s top LNG supplier, surpassing Russian pipeline gas supply. Despite Russia continuing to supply LNG to Europe, efforts within the EU for more measures against Russian LNG could further bolster the importance of American gas in Europe. Another threat to Russia comes from the potential growth in U.S. oil production under the Trump administration, which could impact Russia’s oil revenues significantly. A possible economic slowdown in China, one of Russia’s key oil markets, could also reduce its demand for Russian oil and gas, affecting Russia’s economy.
Analysts predict that Trump’s policies and a strong dollar could weigh on commodity prices and impact oil revenues for countries like Russia. The World Bank forecasts a decrease in the average price of Brent crude oil, reflecting an oversupply in the global market and changes in China’s oil demand due to factors like industrial production slowdown and the rise of electric vehicles. The potential impact of Trump’s policies on China’s economy, such as tariffs, could further affect oil prices and global oil supply. These factors pose significant challenges for Russia’s economy and energy sector in the face of a second Trump administration.
