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Author: Virna Di Palma, Head of Global Content & Brand, Ethixbase360
While large global organizations have extensive experience weighing geopolitical developments as compliance risk, mid-market companies often lack the comparable resources, tools and internal infrastructure to do so. To be sure, over the past year, many have learned how tariffs can affect their operations. Yet when it comes to US sanctions, mid-market companies and small businesses that sit inside the value chains of newly-sanctioned counterparties can be hit with little warning. They are rarely embedded in sanctions-monitoring systems, have limited ability to conduct counterparty screening, and often depend on a small number of suppliers, landlords, or lenders. Exit options are limited, the costs of reconfiguration are high, and the consequences can be acute: frozen cash flow, stranded inventory, and, in extreme cases, bankruptcy.
One recent, niche example concerns hundreds of US gas station operators, mostly in New Jersey, who own Lukoil branded stations as independent franchisees. These small business owners were caught in the crossfire in October 2025, when the US Treasury Department’s Office of Foreign Assets Control (OFAC) sanctioned major Russian companies, including Rosneft and Lukoil. As a result, Lukoil was required to divest its foreign assets, a lengthy process subject to OFAC approval. The franchisees, already dealing with reputational fallout from Russia’s invasion of Ukraine, faced the cut-off of credit card payments, delays in receiving payments from Lukoil, and the need to secure new sources of refined fuel. In early December 2025, Treasury issued a narrow relief to the franchisees, allowing them to continue transacting with Lukoil until April 29, 2026, for purposes of maintenance, operations, and wind-down.
Of course, this case is quite unique, but it highlights broader lessons for mid-market companies operating in high-risk industries such as energy, pharmaceuticals, logistics, manufacturing, and commodities. Sanctions exposure is not only a regulatory risk. It is increasingly a reputational and commercial risk. Even where a company has not violated the law, association with a sanctioned counterparty can trigger lender hesitation, strained banking relationships, supplier disruption, contract termination, and loss of customer trust.