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The US has imposed sanctions on two companies shipping Russian oil, in its first enforcement of measures designed to choke off revenues to the Kremlin as continues its full-scale invasion of Ukraine.
The US Treasury department on Thursday said the two companies, based in the United Arab Emirates and Turkey, had used US-based shipping services while carrying Russian crude bought at a price greater than $60 per barrel, violating the oil price cap G7 countries imposed on Moscow last year.
The enforcement measures come amid G7 countries’ broader effort to restrict the flow of petrodollars to Russian president Vladimir Putin’s war chest. The group issued a statement on Thursday outlining the “risks of violating” the price cap rules.
“Today’s action demonstrates our continued commitment to reduce Russia’s resources for its war against Ukraine and to enforce the price cap,” said US deputy Treasury secretary Wally Adeyemo.
The new sanctions enforcement come as the Joe Biden administration tries to build pressure on the Kremlin for its war in Ukraine and to show support for Kyiv after Congress recently omitted more funding for the country in a stop-gap spending measure.
A senior Treasury official said the Kremlin’s oil tax revenue was down 45 per cent from January to August this year compared with the same months in 2022. But Moscow has increasingly dodged sanctions on most of its oil exports, with almost three-quarters of Russian crude travelling without western insurance in August.
A rally in oil prices in recent months has also helped Russia, with Brent crude rising more than a third between June and September to almost $100 a barrel, before dropping off again in recent weeks.
The Treasury said it had imposed sanctions on UAE-based Lumber Marine for shipping Russian crude bought for more than $75 a barrel aboard its ship SCF Primorye. It is also sanctioning Turkey’s Ice Pearl Navigation Corp, whose Yasa Golden Bosphorus ship handled Russian crude bought for more than $80 a barrel. Both companies used US-based service providers while shipping the oil.
Turkey’s Yasa Holding, which manages the Yasa Golden Bosphorus, did not immediately respond to a request for comment. Ship tracking data showed ExxonMobil recently chartered the vessel which is currently off the coast of Florida, on route to Houston, having collected a cargo of crude from Canada on October 5. ExxonMobil did not immediately respond to a request for comment.
According to official records, the SCF Primorye is managed by Sun Ship Management, a Dubai company already sanctioned by the EU and UK for being part of Sovcomflot, the state-backed Russian tanker fleet.
The G7 statement also said that “given recent price movements” it was “focusing on supporting compliance and enforcement of the [oil price cap] policy”.
“Where we have evidence that companies or persons have engaged in illicit or deceptive practices related to shipments of Russian origin crude oil and petroleum products, we will respond in accordance with the respective restrictive measures established by the coalition members,” it said.
Officials have acknowledged that the oil price cap needed to be fortified, with Bruno Le Maire, France’s finance minister, on Thursday saying that while it was the “right policy” it now needs to be “reinforced”.
“I strongly believe that the price cap has been a good decision, it has been efficient [in reducing] revenues from oil from Russia,” he told reporters on the sidelines of the IMF and World Bank’s annual meetings in Marrakech. But he said “loopholes” still needed to be addressed.
Speaking in Marrakech on Wednesday, Treasury secretary Janet Yellen underscored the need for the US to “continue to impose severe and increasing costs on Russia and continue efforts to ensure Russia pays for the damage it has caused”.
As part of that strategy, Yellen extended her support for European proposals to use profits generated by more than €200bn of Russian assets frozen at international financial institutions to help Ukraine. The bulk of those funds are held at the world’s largest clearing house, Belgium’s Euroclear.
Having racked up considerable tax income on the profits stemming from the frozen assets, Belgium also announced it would launch a €1.7bn fund using those proceeds to help finance the war in Ukraine.
Additional reporting by Sam Fleming, Tom Wilson and Chris Cook
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