US Treasury Imposes Sanctions On Russia’s Largest Shipping Company, Sovcomflot

The U.S. has reportedly imposed sanctions on Russian tanker major Sovcomflot as Washington sought to lower Russian revenue from oil sales it can use for supporting the invasion of Ukraine, the Treasury Department mentioned on Friday. Russia is among the world’s top oil exporters, and the sanctions have been the latest in efforts by Western nations to add the costs of shipping its crude oil and oil products while having the petroleum flowing to worldwide markets.

The Treasury’s Office of Foreign Asset Control designated 14 crude oil tankers as property in which Sovcomflot is interested. The OFAC also issued some general licenses that permit the offloading of crude oil and other cargoes from the 14 vessels for about 45 days, enabling transactions with other tankers belonging to Sovcomflot. Sovcomflot, as a parent company and as a whole, has been implicated in the price cap violations besides deceptive activity, per a senior Treasury official.

The sanctions freeze U.S. assets of targeted and typically bar the Americans from dealing with those. The G7, Australia, and the E.U. also imposed a $ 60-a-barrel price cap on Russia’s oil toward the end of 2022. It also bans the use of Western maritime services like transport, insurance, and financing for shipments of oil that get priced at/above the cap. The designations aim to take some of the vehicles for doing that off the table, which will compel them to invest more in spending and building new avenues for getting the oil out, per the Treasury official.

Some Russian oil shipments are now dependent on an outdated fleet of tankers known as the “shadow fleet,” which transports oil to nations other than Europe, such as China and India, owing to Western sanctions and the current cap. Per the Treasury officials, these expenses diminish Moscow’s ability to fund the war.

The senior official stated that the United States would not reveal the precise violations in which Sovcomflot was allegedly involved. The insider said that because the company works outside of the price cap coalition, the power invoked for the penalties is related to its operations in the Russian maritime industry.

As a form of retaliation for Russia’s invasion of Ukraine two years ago, as well as the death of Alexei Navalny, Russian opposition leader Washington implemented sanctions against Russia earlier on Friday, focusing on over 500 individuals and organizations. The Treasury started enforcing this price cap in 2023 around October, and before Friday, had levied sanctions on 27 tankers for violating this price cap. Shipping data has reflected that several tankers have been anchored off the ports since being sanctioned.

Treasury also mentioned that sanctions enforcement in recent months has been compelling Russia to sell its oil at a higher discount than international benchmark Brent crude, resulting in a fall in Russian revenue. The discount has widened to almost $19 a barrel over the last month compared to $12 and $13 a barrel in 2023 (October), it said.

Reference: Reuters

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Source: Maritime Shipping News