The US imposed sanctions on companies from the UAE and Liberia for violating Russian oil price cap

On February 8, the U.S. Treasury Department’s Office of Foreign Assets Control announced the second round of sanctions in 2024 for violating price restrictions on the maritime transportation of Russian oil.

The new U.S. sanctions target four legal entities and one vessel involved in a scheme to violate the $60 per barrel price ceiling for Russian oil at the end of 2023.

Three companies registered in the UAE and one in Liberia violated the Price Cap

Three companies registered in the United Arab Emirates and one in Liberia were subject to the restrictions. One of these companies, for example, sold Russian Urals crude oil in November 2023 at a price of more than $80 per barrel.

Since September 2023, one of the sanctioned companies has been operating the NS Leader tanker, which the sanctions also affected.

The US announced the second package of sanctions in 2024 against violators of the Rosneft price ceiling, following the first package announced in mid-January. Then the US punished a UAE company that violated the price ceiling for Russian oil.

Two rounds of sanctions for violating Russian oil price restrictions

The US Treasury Department sanctioned the United Arab Emirates-based shipping company Hennesea for transporting oil from Russia at prices above the $60 per barrel cap agreed upon by the G7 nations.

It was reported that Hennesea owned 18 tankers. The company was created at the end of 2022, shortly before the oil price cap was adopted. It purchased old tankers.

The Emirati shipping company made multiple port calls to Russia, from where it shipped oil. Hennesea’s tankers, used for transporting Russian oil at above $60 per barrel, are also subject to new US sanctions.

Starting in October, the US Treasury Department began to actively penalize companies that transported Russian oil at a price higher than the price ceiling.

Oil Price Cap and sanctions evasion alert

On February 1, the Price Cap Coalition published an Oil Price Cap (OPC) Compliance and Enforcement Alert. The Alert, which is directed at both government and industry stakeholders, outlines examples of evasion technics to improve compliance measures, and instructs the members of the Price Cap Coalition on how to report suspected oil price cap breaches.

The enforcement alert identifies sanctions evasion methods that industry stakeholders need to diligently monitor. First, there are opaque shipping and extra costs as a result of attempts to conceal price, shipment, customs, and insurance fees.

Second, the use of a complicated supply chain, third-party middlemen, and shell firms to conceal the origin of Russian oil. It includes frequent changes in ownership of vessels.

Third, the use of Russia’s “shadow fleet,” made up of old vessels with hidden ownership that do not adhere to industry standards. Stakeholders must raise red flags in such cases and actively conduct due diligence to prevent Russia from evading the oil price cap.

Oil Price Cap to limit Russia’s ability to fund its war against Ukraine

The Western coalition adopted the Price Cap to limit Russia’s ability to fund its war against Ukraine through the sale of its oil. The Price Cap prohibits maritime providers from engaging with Russian-origin crude oil that exceeds $60 per barrel in price.

In December 2022, the Western coalition set an upper limit of $60 per barrel for Russian oil exports by sea. The sanctions also prohibit Western companies from providing oil transportation services from Russia at a price higher than the ceiling.

The restriction has forced Russia to reorient its oil sales to much more distant countries, such as China and India, and to invest in “shadow fleets” of worn-out tankers that are not officially tracked. 

Read all articles by Insight News Media on Google News, subscribe and follow.
Scroll to Top