The United States has imposed sanctions on Russia's two largest oil companies in a dramatic escalation of pressure on Moscow, as the Kremlin conducted a major nuclear weapons exercise.
The sanctions, announced on Thursday morning NZ time, target oil giants Rosneft and Lukoil in what marks a significant shift in US President Donald Trump's approach to ending the war in Ukraine.
Summit Cancelled
The move came just one day after Trump abruptly cancelled a planned summit with Russian President Vladimir Putin, telling reporters "it didn't feel right to me."
US Treasury Secretary Scott Bessent said the sanctions aim to cripple Russia's ability to fund its military operations in Ukraine. "Now is the time to stop the killing and for an immediate ceasefire," Bessent said.
Oil prices jumped more than US$2 a barrel following the announcement, which will likely have flow-on effects for fuel prices globally, including in New Zealand.
Nuclear Show of Force
In what appears to be a direct response, Russia released footage of a major strategic nuclear weapons exercise. The drills involved firing missiles from ground launchers, submarines and aircraft, including intercontinental ballistic missiles capable of reaching the United States.
Russian Defence Ministry footage showed long-range Tu-22M3 strategic bombers flying over the Baltic Sea, escorted at various points by NATO fighter jets.
General Valery Gerasimov, head of Russia's General Staff, briefed Putin on the exercises in video released by the Kremlin.
Throughout the Ukraine conflict, Putin has periodically reminded the West of Russia's nuclear capabilities, particularly at crucial moments in the war.
Trump's Frustration Grows
For months, Trump has resisted calls from US lawmakers to impose energy sanctions, hoping Putin would agree to peace talks. However, with the war now in its third year and eight months since Russia's full-scale invasion began, the US president said he felt it was time to act.
Trump has been sharply critical of both Ukrainian President Volodymyr Zelenskiy and Putin at different times, expressing frustration at the lack of progress toward ending Europe's deadliest conflict since World War II.
The cancelled summit had been unexpectedly announced last week after a phone call between the two leaders, with plans to meet in Hungary. However, following discussions between the countries' top diplomats on Monday, the White House announced Trump had no plans to meet Putin "in the immediate future."
Kremlin spokesperson Dmitry Peskov said preparations for a summit were ongoing, but added that "thorough preparation is needed before then, and that takes time."
Sticking Points
The summit appears to have fallen apart after Russia reiterated its previous terms for peace, including demands that Ukraine cede control of the entire southeastern Donbas region, according to sources speaking to Reuters.
This effectively rejected Trump's proposal from last week that both sides should stop fighting at the current front lines.
European Response
The European Union also approved its 19th package of sanctions against Russia on Thursday, including a ban on Russian liquefied natural gas imports.
Meanwhile, European defence company shares rose on news of the summit delay, as most European governments strongly back Ukraine and have pledged to increase military spending.
Sweden announced it had signed a letter of intent to export Gripen fighter jets to Ukraine. President Zelenskiy, visiting Swedish defence manufacturer Saab, said Ukraine aimed to receive the jets next year and hoped to acquire at least 100 of the rugged, relatively low-cost aircraft.
Ukrainian pilots have already been in Sweden testing the Gripen.
Ongoing Fighting
Russia and Ukraine continued to pound each other with heavy missile attacks overnight as uncertainty swirls around US-led peace efforts.
Trump said he was still not ready to provide Ukraine with long-range Tomahawk missiles, which Kyiv has requested, saying it would take at least six months for Ukrainian forces to learn how to use them.
However, Trump said he hoped Chinese President Xi Jinping would use his influence on Putin to halt the fighting when they meet next week in South Korea. China and Russia have formed a strategic alliance in recent years.
European Union leaders are due to meet on Friday (NZ time) to discuss a proposal to use frozen Russian assets to extend a US$163 billion loan to Ukraine. Moscow has described the scheme as theft and vowed to retaliate.