Could a US-Russia Lukoil deal create new strategic opportunities for Cyprus?

Cyprus could gain from changing US approach to Russia, analyst saysThe prospect of a major energy deal involving Russia’s Lukoil could create new strategic opportunities for Cyprus and Greece, while also changing how Washington approaches the war in Ukraine, international relations expert Charalambos Chrysostomou has said. Chrysostomou told the Cyprus News Agency (CNA) that a potential agreement between the United States and Russia over Lukoil’s international assets could become a bridge between the two countries and influence the course of the war in Ukraine. Reports have suggested that the administration of US President Donald Trump has included a multi-billion-dollar oil deal in its negotiations with Moscow over ending the war. The reported agreement concerns a broad portfolio of oil fields, refineries and fuel stations in several countries owned by Russian energy group Lukoil, although any such deal would require formal approval by the two countries. Chrysostomou argued that the issue went far beyond Lukoil itself, bringing oil, the war, sanctions and American economic interests into the same negotiations. “It is a potential piece of a much larger puzzle, where oil, war, sanctions and American economic interests meet at the same table,” he said. He explained that the potential entry of American investors into Lukoil’s international assets comes at a critical point, with Ukrainian attacks putting pressure on Russian energy production, fuel markets facing disruption and the Trump administration seeking ways to connect economic incentives with a possible settlement in Ukraine. “In a more transactional American policy, the deal can acquire greater weight in managing a dispute,” Chrysostomou said. He argued that this approach could leave room for new opportunities involving Turkey, Greece and Cyprus, with each country potentially assessed by Washington according to what it can offer strategically and economically. Energy as a bridge between Washington and Moscow The possible involvement of American investors in Lukoil’s international assets comes as Ukrainian strikes on Russian refineries have turned energy infrastructure into an important front in the war, Chrysostomou said. “The question is not simply who is buying Lukoil, but who is buying the day after the war,” he said. Asked why the issue had become important now, he replied that “oil has become a weapon again”. “The Ukrainian strikes on Russian refineries have turned energy infrastructure into a critical front in the war,” he stated. “Ukraine wants to reduce Russian revenues and Moscow’s ability to fuel its war machine,” Chrysostomou explained. “But as Russian refining declines, the global fuel market also comes under pressure.” “And that directly concerns Trump: the price of energy means inflation, transport costs and political pressure inside the United States,” he added. Asked whether Trump wanted more oil from Russia or more peace, Chrysostomou replied that “it could be both”. He said the American approach appeared increasingly transactional, with sanctions potentially being used not only as punishment but also as a bargaining tool. Economic re-engagement with Russia, he argued, could in turn be offered as an incentive for an agreement over Ukraine. “In simple terms, more economic normalisation in exchange for greater political and military de-escalation,” he said. What could it mean for Cyprus and Greece? Chrysostomou said the approach represented a difference between the traditional European and Greek emphasis on international law, the law of the sea, rules and alliances and a Trump administration that places greater weight on transactions, economic benefit and the geopolitical usefulness of individual countries. This did not mean international law had become irrelevant, he mentioned. “It means, however, that in a more transactional American policy, the deal can acquire greater weight in managing a dispute,” Chrysostomou said. He argued that this could create opportunities as well as risks for Athens and Nicosia, particularly as Washington assesses the strategic assets offered by countries in the region. “Turkey offers geography, the Straits, the Black Sea and access towards Russia and the Middle East,” he said. “Greece offers LNG, ports, military infrastructure, the Balkans and energy interconnections.” “Cyprus offers a strategic position in the Eastern Mediterranean, energy potential and links with Greece, Israel and Egypt,” Chrysostomou added. The result, he argued, could mean that Washington does not necessarily approach the region through a simple choice between Greece and Turkey. “The American logic may not be ‘Greece or Turkey’, but rather: ‘What can Turkey offer? What can Greece offer? What can Cyprus offer?’” he said. That approach could create opportunities but also risks for Athens and Nicosia, he added. “Their strategic importance should be converted into specific economic, energy and geopolitical value for the United States,” he explained. Could oil help bring the war to an end? The central question, according to Chrysostomou, is whether oil can ultimately become a bridge towards ending the war. “This is the big question,” he said. “If Lukoil develops into a broader American-Russian economic rapprochement, it could become part of a new post-war architecture,” Chrysostomou added. However, he warned that the energy sector could remain a battlefield if Ukraine continues attacking Russian energy infrastructure while Russia responds by targeting Ukrainian energy facilities. “Ukraine is using energy to put pressure on Russia,” he said. “Russia is using energy to maintain its power.” “Trump is attempting to use energy, sanctions and American capital as leverage for an agreement,” Chrysostomou continued. If that logic prevails, he argued, the future shape of Europe could be influenced not only on the battlefield but also through refineries, energy interconnections and major geopolitical deals. What could Putin and the US gain? For Russian President Vladimir Putin, the potential gains from such an arrangement would extend beyond the immediate financial benefits, Chrysostomou said. “The biggest potential gain is not only economic,” he explained. “It is the return of American business interests to the Russian economy.” He recalled that following Russia’s invasion of Ukraine in 2022, Western countries sought to isolate the Russian economy. “An American investment return would show that sanctions can change when political conditions change,” Chrysostomou said. “For the Kremlin, this constitutes a significant geopolitical gain,” he added. For the United States, meanwhile, American capital could gain access to valuable energy assets, while Washington would also gain a potential negotiating tool, he said. “Energy becomes a tool against Putin,” Chrysostomou said. If American companies were able to invest in the Russian energy market, Washington could secure an economic benefit while simultaneously providing Moscow with a strong incentive to reach an agreement, he explained. “This is the essence of America First: foreign policy is becoming increasingly linked to the question of ‘what do the United States gain?’” Chrysostomou stated. Why is Ukraine targeting Russian refineries? The attacks on Russian refineries illustrate the competing strategic objectives surrounding energy, according to Chrysostomou. For Ukrainian President Volodymyr Zelenskyy, Russian oil represents a source of funding for the war, while for Trump, attacks on refineries can create problems in the global fuel market, he mentioned. “Ukraine wants to make Russian oil more expensive for Russia, while Trump wants energy to be cheaper for America,” Chrysostomou explained. “The same energy weapon serves two different strategies,” he added. Europe, meanwhile, has substantially reduced its dependence on Russian energy but has not escaped the wider global energy market, Chrysostomou stated. Europe may therefore buy less Russian oil while still paying more for fuel as a result of the war, disruption to Russian production and wider geopolitical instability. “The European problem is therefore not only Russia,” he said. “It is that Europe does not control the basic variables of the global energy market,” Chrysostomou added. For Cyprus, the debate has particular significance because of its position in the Eastern Mediterranean and its links with Greece, Israel and Egypt, meaning that changes in the relationship between Washington and Moscow could have implications beyond the immediate question of the war in Ukraine.