U.S Treasury Department Announces Stricter Compliance Regime For Russian Oil Price Cap

In reaction to Russia’s invasion of Ukraine, the U.S.-led coalition, which set a $60 per barrel price restriction on Russian oil transported by sea, has tightened its compliance procedures.

On Wednesday, the Treasury Department declared that the coalition will impose more stringent regulations, increasing Russian exporters’ difficulty evading the price ceiling.

Before engaging in lifting or loading activities, these modifications require that Western marine service providers receive statements from their counterparties attesting that the Russian oil was sold within the set cap.

For oil transactions exceeding the designated cap, Western businesses cannot provide marine services under the price cap method, including finance, insurance, and shipping.

The Treasury Department clarified that these changes make it more difficult for Russian exporters to get around the price cap, putting Coalition service providers under even more scrutiny. This action will likely result in higher expenses for Russian exporters desiring first-class services but need help to adhere to the price cap.

At the same time, three oil traders engaged in Russian oil trading and ship management owned by the Russian government were hit with further sanctions by the Treasury. One of the targets is SUN Ship, a ship management located in the United Arab Emirates that is controlled by a Russian government-owned fleet.

According to the Treasury, SUN Ship oversaw a ship that was earlier intended to transport Russian crude oil at a price higher than the set cap.

Sanctions were also imposed on Russian oil traders with offices in Hong Kong and the UAE. The Treasury disclosed that these firms’ hired vessels have made several port calls in Russia, transacting millions of tons of crude oil and other items from state-owned oil corporations in Russia.

The targeted entities’ U.S. assets are frozen due to these penalties, which also generally forbid Americans from doing business with them. Washington has been taking sanctions to close loopholes related to the price cap on Russian oil, and this current action is the result of those penalties.

Treasury Deputy Secretary Wally Adeyemo highlighted Washington’s dedication to promoting stable energy markets while lowering Russian income to finance the ongoing conflict with Ukraine.

The price cap has caused Russia to pay additional costs. It has limited the revenue for military objectives by diverting significant seaborne exports to alternative clients in China and India. Despite the sanctions, China and India took advantage of the imposed measures by buying oil from sanctioned businesses.

Reference: Reuters

U.S Treasury Department Announces Stricter Compliance Regime For Russian Oil Price Cap appeared first on Marine Insight – The Maritime Industry Guide

Source: Maritime Shipping News