The Trump administration has rejected a request from oil giant Exxon Mobil to allow it to drill in Russia's Black Sea region. US Secretary of State and ex-Exxon CEO Rex Tillerson had recused himself from the decision.
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Treasury Secretary Steven Mnuchin said the US would not be issuing any waivers to American oil companies seeking to drill in Russia.
"In consultation with President Donald J Trump, the Treasury Department will not be issuing waivers to US companies, including Exxon, authorizing drilling prohibited by current Russian sanctions," the Treasury Department head said in a statement.
The US raised sanctions on Russia back in 2014 under then President Barack Obama in response to it annexing of the Crimea region of Ukraine. As part the restrictions, US oil firms are barred from transferring industry knowledge and technology allowing for more efficient offshore drilling and in shale formation to Russian counterparts.
In a statement, Exxon said it understood the government's decision but warned that it would only serve to help European energy companies, operating under looser Russian sanctions, to gain an upper hand in the region.
"Our 2015 application for a license under the provisions outlined in the US sanctions was made to enable our company to meet its contractual obligations under a joint venture agreement in Russia, where competitor companies are authorized to undertake such work under European sanctions," Exxon's statement said.
Rosneft officials have revealed that Italy's energy giant Eni plans to begin drilling in the region where Exxon had initially hoped to.
Hit hard by sinking oil prices
Prices for crude oil are reaching new lows almost daily due to oversupply and unease over the global economy. Some countries have been hit harder than others.
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A great, big hangover
Even Norway isn't immune to the falling price of oil. For years, the wealthy Scandinavian nation had fueled its rapid growth with the oil it pumped out of the North Sea. But what once transformed a poor agrarian state into one of the richest countries in the world now has policymakers wondering if it wouldn't be wiser to allocate more resources to Norway's fishing industry.
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Double trouble
For Russia, the falling price of oil has added insult to injury as its economy is already reeling under Western sanctions. In 2015, economic output in the country shrunk by around 4 percent. As a result, salaries have dropped and the ruble has lost half of its value against the dollar. The news service Bloomberg estimates that 2016 will be another recessionary year for Russia.
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An uncertain future
Nigeria is Africa's largest producer of oil. Before being elected president, Muhammadu Buhari announced that he would increase government spending - but the drop in the price of oil may make that promise impossible to fulfill. The World Bank estimates that three-quarters of the Nigerian state's revenues come from the oil business. Many infrastructure projects are currently on hold.
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New realities
Nigeria's not the only country that calculates its budget based on the price of oil staying high. The result has been a big gap between expected and actual revenues. The price for a barrel of oil has dropped by nearly 75 percent since mid-2014. Many experts currently have little reason to believe the per-barrel price will return to its old level of $120 (110.76 euros) anytime soon.
After sanctions
Now that sanctions against Iranian exporters have been lifted, the Islamic Republic plans to ramp up its oil production by half a million barrels a day - putting further pressure on an already oversupplied energy market. Iran, for its part, blames its archrival Saudi Arabia for falling oil prices.
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Less giving, more taking
Saudi Arabia has refused to curb oil output in order to protect its market share from competition from the US fracking industry and Iran. But now, even the world's largest oil exporter is starting to get a taste of its own medicine. The International Monetary Fund is warning about a massive impending budget deficit. The Saudis want to introduce taxes and slash energy and food subsidies.
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How long will reserves last?
Like their Saudi counterparts, other oil-rich Gulf statessuch as Qatar, Oman and the United Arab Emirates are also watching their energy reserves dwindle. These regional powers all boast large sovereign wealth funds - but altogether, the six Gulf states have already accumulated a budget deficit worth $260 billion (239.8 billion euros), according to estimates by JP Morgan Chase.
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Winds of change in Venezuela?
Venezuela has the largest oil reserves in the world. For years, the country's socialist government used revenues from the sale of oil to fund its lavish social programs. Now, President Nicolas Maduro has declared a state of emergency for the Venezuelan economy. Popular support for the successor to Hugo Chavez has been slipping for about a year - about as quickly as the price of oil has dropped.
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What now?
Thanks to a boost in shale gas extraction, aka fracking, the US is now the world's largest energy producer. Low oil prices, however, have made fracking widely unprofitable. The US is also one of the largest consumers of energy in the world. While motorists may celebrate having to spend less money at the pump, bigger, gas-guzzling vehicles are gaining in popularity - bad news for the environment.
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Exxon had previously said in regulatory filings that it expects the losses incurred by the US' sanctions on Russia to be in the region of $1 billion (932 million euros).
Under Treasury Department rules, the US oil giant would be allowed to resubmit its waiver request on Russian sanctions it if provides additional information that the government had not previously reviewed.
Exxon had seen a previous waiver request rejected by the Obama administration in 2015. However, according to the Wall Street Journal newspaper, the energy giant had begun pressuring the Treasury for special grants to drill in the Black Sea region back in March, shortly after its former CEO Rex Tillerson was appointed as the new US Secretary of State by President Donald Trump.
Despite the Treasury's decision, Trump has pledged to bolster the US oil sector by promoting exploration and slashing regulations.
Tillerson and Putin: no longer comradesImage: picture alliance/dpa/Alexey Druginyn Mandatory Credit/R. Novosti
Relations sour
The Treasury's decision will do little to warm relations between Washington and Moscow, which have soured following a US missile strike on a Syrian air base earlier this month. Trump said the strike was carried out in retaliation to an alleged chemical attack on Syrian civilians and rebel fighters.
On a visit to Moscow to hold talks with his Russian Foreign Minister Sergei Lavrov last week, Tillerson had hoped to convince Moscow to end it support of Syrian President Bashar al-Bassad. However, the talks amounted to little. Russia's top diplomat went on to decry the US' "contradictory" foreign policy, while President Putin said he believed relations between the two countries had - contrary to popular belief - deteriorated during the Trump administration.
Despite this, congressional and federal investigations over allegations that Russia had sought to tip last year's election in Trump's favor remain ongoing.
