U.S. Sanctions Russia's Largest Shipper As It Says Oil Price Cap Enforcement Bearing Fruit
According to RFE/RL, The United States said on February 23 that it is targeting Russia’s largest state-owned shipping company and fleet operator for sanctions, saying at the same time that a price cap on Russian sea-borne oil imposed in December 2022 is serving its "twin goals" of limiting Kremlin profits from the sale of oil while promoting stable energy markets.
Deputy Treasury Secretary Wally Adeyemo said in a news release that the targeting of Sovcomflot was the "next step" after the price cap.
"We are entering the next phase of increasing Russia’s costs in a responsible manner to mitigate risks," Adeyemo said, adding that in addition to the designation of Sovcomflot, the treasury's Office of Foreign Assets Control (OFAC) has identified 14 crude oil tankers as property in which Sovcomflot has an interest.
OFAC said it issued a general license authorizing the offloading of crude oil or other cargo from these 14 vessels for a period of 45 days. In addition, OFAC is issuing a general license authorizing transactions with all other Sovcomflot-owned vessels at this time. Nothing in these general licenses changes any of the restrictions imposed by the price cap sanctions regime.
The Treasury Department earlier on February 23 released an analysis showing that Russia is selling its oil at a steeper discount to global prices since Western governments in October stepped up enforcement of its sanctions regime.
Russia sold its oil at an average discount of $19 last month compared with $12-$13 in October, the U.S. Treasury Department said in a February 23 statement. The Treasury Department oversees U.S. sanctions enforcement.
The United States and the European Union in December 2022 imposed a $60-per-barrel price cap on Russian oil shipped with the use of Western service providers -- such as transportation and insurance firms -- to curtail the Kremlin’s ability to finance its war.
