The United States imposed sanctions on two shipping companies on Thursday for violating oil price caps imposed by the Group of Seven nations to deprive Russia of energy export revenues, the first sanctions of their kind to be imposed amid growing concerns that the policy has been undermined by evasion and loopholes.
The sanctions were announced at a time of renewed concern about global energy prices following a Hamas attack on Israel over the weekend that threatens to spiral into a regional conflict. The price cap was put in place late last year to prevent Russia from profiting from rising energy prices by limiting its ability to sell oil using Western insurance and financing.
The cap is set so that Russian oil cannot be sold using these services for more than $60 per barrel.
The Treasury Department imposed sanctions on Lumber Marine, a UAE-based shipping company, for transporting crude oil at more than $75 per barrel from a Russian port after the cap was put in place. It also imposed sanctions on Ice Pearl Shipping, a Turkish shipping company, for transporting Russian crude oil at a price exceeding $80 per barrel.
Adding it to the US sanctions list could result in both companies being banned from participating in global oil trade.
“Today’s action demonstrates our continued commitment to reducing Russia’s resources for its war against Ukraine and imposing price caps,” Deputy Treasury Secretary Wally Adeyemo said in a statement.
The Treasury and the rest of the G7 are closely monitoring how oil markets respond to the price cap. They largely considered it a success because oil prices did not rise, and officials believe Russian oil profits eroded because the Kremlin was forced to invest heavily to develop a “shadow” fleet of ships and alternative financial service providers.
The G7 and Australia, also part of the so-called price cap alliance, said in a joint statement they were united in their work to impose the cap.
“When we have evidence that companies or persons have engaged in illegal or deceptive practices related to shipments of crude oil and petroleum products of Russian origin, we will respond,” the statement said.
US officials are warning shipping companies of potential violations. The Treasury Department described the action it took on Thursday as a new phase in implementing the price cap.
Treasury Secretary Janet L. “We will not tolerate evasion and we are monitoring that closely,” Yellen told The New York Times in an interview this week. “To the extent that there is evasion, we certainly need to take action to deal with that, and you should expect us to do that.”
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