US Treasury Department seeks to bolster Russian oil price cap with new sanctions
A year after implementing the first price cap on Russian crude oil, the US Treasury Department said it is tightening its anti-Russia sanctions with new and updated guidelines.
PHOTO: Oil pump jack and oil barrels with Russia flag. Getty Images
The US Treasury Department’s Office of Foreign Assets Control (OFAC) has updated its anti-Russian sanctions list and added four companies and one oil tanker to it for allegedly breaching the $60/bbl price cap set on Russian crude oil.
The sanctions were imposed on a “Government of Russia-owned ship manager as well as several obscure oil traders who have emerged as frequent participants in the seaborne transportation of Russian-origin oil following the imposition of the price cap,” OFAC said.
According to the list, the OFAC has introduced sanctions against three companies and one tanker for evading the price cap
- UAE-based ship manager Sun Ship Management,
- Hong Kong-based oil trader Bellatrix Energy
- Hong Kong-based oil trader Covart Energy.
- Russian-flagged oil tanker SANAR-15
Meanwhile, the UK government's Treasury Department claims that price caps on Russia contributed to shrink its tax revenue from oil and petroleum exports by 32% between January and November this year compared to the same period last year.
The price cap coalition
The price cap coalition was formed by the G7 group of countries – Canada, France, Germany, Italy, Japan, the UK, the US, and the “non-enumerated member” EU – and Australia. They set out to curtail Russia's export revenues with a restrictive oil price cap policy and a variety of other economic measures. This, they have argued, will limit the financial resources Russia can muster to sustain its ongoing war in Ukraine.
Two price caps on Russian oil products were set at the beginning of the year. The first one was a price cap of $100/bbl on higher-value products such as diesel and gasoil that trade at a premium to crude. The second was cap of $45/bbl on lower-value products like fuel oil that are traded at a discount to crude.
In December 2022, the first price cap of $60/bbl was set on crude oil originating from Russia.
By Aparupa Mazumder
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