Three shipowners based out of the United Arab Emirates were subject to sanctions by the U.S. Treasury, which accused them of violating the price cap imposed on Russian crude oil, set at $60 per barrel, The Financial Times reports. The G7 implemented the cap on seaborne Russian crude oil in December to undermine Russia’s finances after it invaded Ukraine without disrupting the global energy supply.
The sanctions are part of a strategy intended to enhance enforcement of the cap amidst evidence that it has been circumvented. Most of the Russian oil traded in October exceeded the G7 price limit, a report revealed.
The sanctions’ targets include Kazan Shipping, Progress Shipping, and Gallion Navigation. They were sanctioned for their use of “U.S. person services while transporting the Russian origin crude oil.”
This distinction is crucial as the price cap applies specifically to Russian oil transported on vessels utilizing services or insurance from the countries that implemented the cap. Deputy U.S. Treasury Secretary, Wally Adeyemo, highlighted the commitment to maintaining market stability while holding accountable involved parties aiding in Russian oil trade evasion.
The UAE has drawn attention from Western officials for its apparent role in helping evade sanctions imposed on Russian oil since its invasion of Ukraine. This included facilitating the trans-shipment of dual-use goods and partaking in the oil trade.
The price cap’s objective is to limit Russia’s oil revenue without completely banning crude exports; however, it faced challenges as Moscow was able to bypass the sanctions by establishing alternative networks to sell its oil over the imposed cap.
Despite admitting to increased Russian oil trading above the $60 cap, officials noted an increase in transaction costs, which would limit Moscow’s profits. The U.S. aims to intensify price cap enforcement by reducing incentives for trading Russian oil.
