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U.S. Sanctions Two Tankers Accused of Violating Russian Oil-Price Cap – WSJ (video)

Watch Video: Russian Oil Is Fueling American Cars Via Sanctions Loophole. Move is first public attempt by the Biden administration to crack down on suspected rule-breaking (Photo Illustration: Laura Kammermann)
Watch Video: Russian Oil Is Fueling American Cars Via Sanctions Loophole. Move is first public attempt by the Biden administration to crack down on suspected rule-breaking (Photo Illustration: Laura Kammermann)

Andrew Duehren and Joe Wallace , WSJ

EnergiesNet.com 10 12 2023

The U.S. hit two oil tankers and their owners with blocking sanctions and said they had carried Russian oil above the West’s price cap of $60 a barrel, the first time the Biden administration has punished market participants for violating the rules. 

The Treasury Department said it was targeting one ship with a registered owner in the United Arab Emirates and one with a registered owner in Turkey. Both ships carried Russian oil above $60 a barrel while using U.S. maritime services, according to the Treasury. The new sanctions prohibit all U.S. people and entities from transacting with the ships and their owners.

Russian oil has traded well above the $60-a-barrel limit since late July, posing a challenge to a Western sanctions plan that aims to hold down the Kremlin’s oil revenues while still keeping global oil supplies steady. U.S. and European officials, who have largely blocked imports of Russian oil into their own countries, see reducing Russia’s oil revenues as a way to hamper Moscow’s ability to finance the war in Ukraine. 

Some traders and analysts had started to believe that the U.S. wouldn’t harshly enforce the sanctions to avoid upsetting oil markets. Treasury Secretary Janet Yellen told The Wall Street Journal this week that the U.S. would likely move to crack down on evasion

But the measures announced Thursday were limited in scope. The risk for U.S. officials with the enforcement push is that Western firms involved in the Russian oil trade could pull back further—potentially leaving Russian oil without a path to global markets. That could squeeze global supplies and raise oil prices, feeding inflation.   

The price-cap plan, which also includes separate limits on Russian sales of refined oil products such as diesel, applies to Western insurers, traders and banks that handle Russian oil. Moscow has also built up its own shipping infrastructure, the so-called shadow fleet, so it can ignore the Western sanctions.

That new infrastructure, coupled with higher oil prices, has enabled Russia to earn more from its energy exports in recent months. In September, Russia’s oil-export revenues jumped to $18.8 billion, the International Energy Agency said Thursday—the highest amount since July last year. U.S. officials say building up the shadow fleet costs money that Russia could otherwise spend on the military.

To try to combat Russia’s shadow fleet, the Treasury Department released a series of recommendations to port managers across the world to reduce legal and environmental risks from old, underinsured ships. 

After Russian oil breached the price cap this summer, some Western companies, including Greek shipowners, started to pare back their involvement in the trade. Western firms involved are protected from sanctions if they can attest that the oil was sold at or below the cap—as far as they know.

Mike Salthouse, the head of external affairs at maritime insurance firm NorthStandard, said this summer that the higher prices added to the risk of insuring shipments of Russian oil. 

“We’re very aware of the issue and we’re looking at lots of ships that have those cargoes on board,” he said. “If someone lets me know they’re carrying Russian oil, they get lots of questions.”

A senior Treasury official said the U.S. would continue trying to crack down on evasion of the price cap “to send a clear signal to the market.”

One of the newly sanctioned ships, SCF Primorye, is part of a fleet of tankers run by a Dubai-based subsidiary of Russia’s state-owned shipping company, according to a European Union database. The U.S. didn’t sanction the subsidiary, instead targeting a shell company, which owns the ship and nothing else.

In the shipping industry, it is common for vessels to be owned by shell companies while the primary company is the manager. Sovcomflot’s Dubai unit didn’t respond to a request for comment.

The second ship, Yasa Golden Bosphorus, is part of a fleet managed by a unit of Turkish company Yasa Holding. The U.S. sanctioned the tanker, which it said had moved Russian oil priced above $80 a barrel, and the single-ship company that owns it.

Yasa Holding didn’t respond to a request for comment.

Write to Andrew Duehren at andrew.duehren@wsj.com and Joe Wallace at joe.wallace@wsj.com

wsj.com 10 12 2023

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