President Donald Trump signed an executive order on Friday that waived sweeping US sanctions and tariffs targeting Russia's energy revenues, marking a new low in Washington's ties with Ukraine.
The move came as Ukrainian President Volodymyr Zelenskyy urged EU leaders to keep financing Kiev's fight with nearly $80 billion more next year, insisting he was standing up for his country as Trump's support slumped.
The Lindsey Graham Act, named after the deceased US senator who sponsored the bill, had allowed Trump the authority to impose duties up to 100 percent on major buyers of Russian oil and gas.
The legislation, which Trump signed into law last month, targeted Russia's energy and defence sectors, President Vladimir Putin and other senior officials, as well as Moscow's shadow fleet of tankers used to circumvent Western sanctions.
Trump's reversal on the Russia sanctions comes after he struck a deal with Putin to ease sanctions on Russia in exchange for Moscow releasing large amounts of diesel into global markets.
The US president's war in Iran has sparked crippling oil shortages and price spikes, creating major headwinds for his Republican Party ahead of midterm elections next month.
Asked if he was being made a scapegoat for Trump's domestic woes ahead of the vote, Zelenskyy just smiled.
"This is my answer," he told journalists in Brussels, after an extended pause.
In another sign of strained relations between the United States and Ukraine, Trump branded Kiev's actions a "disgrace" after Zelenskyy ordered his forces to resume strikes on Russian refineries.
"I defend the interests of Ukraine and the Ukrainian people exclusively," Zelenskyy said after talks with EU leaders.
The breakdown between Trump and Zelenskyy has fuelled fears that the US leader is siding with Moscow.
Ukraine uses technology from Elon Musk's SpaceX for battlefield communications, but the tech billionaire, a virulent Zelenskyy critic, said his company was not behind the disruption, while a US official denied any intervention by Trump.
Trump blocking Russia sanctions a 'historic moment': Putin envoy
Trump's decision to waive a new package of sanctions on Russia is a "historic moment", a Russian presidential envoy said on Saturday.
"The Trump administration's suspension of the Graham Act is an important and truly historic moment," Kirill Dmitriev, envoy for Russian President Vladimir Putin, said on social media.
The Kremlin and Putin, who appeared in military uniform on Friday and said Moscow intends to seize the rest of eastern Ukraine, have not yet reacted to the move, which is a major diplomatic win for Russia.
Dmitriev said the act would have caused "serious damage first and foremost to the US economy and global markets".
