US imposes first sanctions for violations of Russian oil price limit | ET REALITY

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The United States imposed sanctions on two shipping companies on Thursday for violating the oil price cap that the Group of 7 countries enacted to deprive Russia of revenue from energy exports, the first such sanctions to have been imposed amid growing concerns that the policy has been diminished by evasion and loopholes.

The sanctions were announced at a time of renewed anxiety over global energy prices following Hamas’s attack on Israel over the weekend that threatens to escalate into a regional conflict. The price cap was established late last year to prevent Russia from benefiting from skyrocketing energy prices by limiting its ability to sell oil using Western insurance and financing.

The limit was set so that Russian oil could not be sold using those services at more than $60 per barrel.

The Treasury Department imposed sanctions on Lumber Marine, a shipping company based in the United Arab Emirates, for transporting crude oil priced above $75 a barrel from a Russian port after the limit was set. It also sanctioned Ice Pearl Navigation Corporation, a Turkish shipping company, for transporting Russian crude oil priced above $80 per barrel.

Being added to the US sanctions list could prevent both companies from participating in the global oil trade.

“Today’s action demonstrates our continued commitment to reducing Russia’s resources for its war against Ukraine and enforcing the price cap,” Wally Adeyemo, deputy secretary of the Treasury, said in a statement.

The Treasury Department and the rest of the G7 have been closely watching how oil markets have responded to the price cap. They have largely considered it successful because oil prices have not risen and officials believe Russian oil profits have been eroded because the Kremlin has had to invest heavily to develop a “shadow” fleet of ships and suppliers. of alternative financial services.

The G7 and Australia, which is also part of the so-called price cap coalition, said in a joint statement that they were united in their work to enforce the cap.

“When we have evidence that companies or individuals have engaged in unlawful or deceptive practices related to shipments of crude oil and petroleum products of Russian origin, we will respond,” the statement said.

US officials have been warning shipping companies about possible violations. The Treasury Department described its action Thursday as a new phase of enforcement of the price limit.

“We are not going to tolerate evasion and we are looking at it very closely,” Treasury Secretary Janet L. Yellen told the New York Times in an interview this week. “To the extent that there is evasion, we certainly should take steps to address it and should be expected to do so.”

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