US imposes first sanctions over Russian oil price cap

The US imposed its first sanctions on two companies for violating the price cap on Russian oil that the G7 and its allies approved last December.

The U.S. Treasury Department said today that Lumber Marine, a company based in the United Arab Emirates (UAE), was sanctioned because one of its vessels was carrying Russian crude oil at prices above $75 a barrel. The same was applied to Ice Pearl Navigation Corp., a company based in Turkey, for transporting Russian crude oil at prices above $80 a barrel.

These are the first sanctions the US has imposed on ship owners accused of violating regulations on the price cap on Russian oil.

"Today's action demonstrates our commitment to reducing the resources Russia is devoting to its war in Ukraine and to enforcing a price ceiling on oil," said US Treasury Undersecretary Wally Adeyemo.

The G7, the European Union (EU) and Australia imposed a price ceiling of $60 per barrel on Russian crude in December last year to limit Moscow’s oil revenues and ensure global oil supplies. The cap prohibits companies providing maritime services such as insurance, finance and shipping for Russian oil to be sold above $60 per barrel.

Both vessels operated by sanctioned companies used the services of US-based suppliers when transporting Russian-origin oil. US sanctions could restrict the two companies’ participation in global trade networks.

An oil well near the city of Nefteyugansk, northern Russia in 2004. Photo: Reuters

A US Treasury official said that authorities would tighten discipline in the market in the future. The official described the first sanctions as a new phase in the US and its allies' efforts to cap oil prices.

US Treasury Secretary Janet Yellen said on October 11 that the oil price ceiling has sharply reduced Russia's revenue over the past 10 months and that the US and its allies must continue to maintain pressure to make Russia pay an increasingly high price for the war in Ukraine.

Separate statements from the G7 and Australia noted that tax revenues from Russian oil in the first eight months of this year were 45% lower than in the same period in 2022.

"When we have evidence that companies and individuals are engaging in illegal or fraudulent activities in the transportation of crude oil and petroleum products originating from Russia, we will take retaliatory measures," the statement said.

Russia has not commented on the US sanctions against the above companies.

Thanh Tam (According to AFP, Reuters )

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