The US hit two companies carrying Russian oil with its first sanctions designed to curb revenues to the Kremlin as it continues to attack Ukraine and as concerns about loopholes weakening the policy arise.
The US Treasury Department said United Arab Emirates’ (UAE) Lumber Marine SA and Turkey’s Ice Pearl Navigation Corp. transported Russian crude using US-based shipping services and was purchased above the Group of 7 (G7) nations’ $60 per barrel price cap.
Lumber Marine carried crude oil above $75 per barrel from a Russian port after the cap was imposed, while Ice Pearl Navigation carried the product above $80 per barrel.
The measures could impact how the two tanker owners trade oil globally as the sanctions identify and ban access to all their property and interests in the US.
An official for the price cap coalition said the US shipping services involved would not be subject to sanctions, provided they received false or misleading information about the Russian crude’s price.
Restricting Russia’s Oil Revenues
Lumber Marine’s and Ice Pearl Navigation’s actions presented an apparent breach of the oil price cap Washington, G7, and Australia imposed on Moscow in 2022.
The cap has been put in place to reduce Russia’s energy export revenues, keeping the country from capitalizing on higher energy prices by restricting its oil sales through Western insurance and funding.
While Russian oil continues to flow, its costs have become significantly cheaper due to the policy, limiting Moscow’s revenue for financing its war on Ukraine.
G7 has been keeping a close eye on oil markets’ reaction to the price cap and largely considered it a success as crude prices saw no increase. Officials also believed that the oil profits of Russia had been weakened as the Kremlin relied on a “shadow” fleet and other financial service providers.
The sanctions came at a time of renewed worries over global energy prices following the confrontation between Israel and the Palestinian militant group Hamas, which is at risk of becoming a regional fight.
The move was seen as a new stage of price cap implementation, although a small step considering the extent of policy evasion that energy analysts believed to be occurring.
