The Biden administration is set to announce new measures aimed at increasing the cost for Russia’s attempts to evade a price limit on its oil. The West seeks to enforce the price cap that was introduced almost a year ago more strictly. The US Treasury Department will be imposing sanctions on two entities and identifying two vessels as blocked property. These vessels use price cap coalition services providers while transporting Russian crude oil above the agreed price gap. The goal of these measures is to send a clear message to Russia that attempts to expand beyond the costly options will face a unified response from the US and its allies.
The new sanctions primarily target Russia’s illicit fleet of ships that have been built up by the Kremlin in the past year. The fleet is used to transport Russian oil and oil products and sell them above the price limits set by the West. The Biden administration aims to significantly increase the costs for Russia in this next phase. In addition to the sanctions, the G7 price cap coalition is reiterating the risk of violating price cap rules in a new joint statement. The policy process for these measures has been ongoing for several months, and the goal is to cut off revenues to Russia that are being used to fund its invasion of Ukraine while minimizing disruptions for global consumers.
The price cap on Russian oil was implemented in December 2022 by the United States, G7 allies, and Australia. It banned the purchase of Russian oil above $60 per barrel if it was shipped, insured, or financed by the West. The aim was to limit revenues to Russia while ensuring a sufficient supply of oil on the market. However, the Kremlin found ways to work around the price cap by using alternative means to ship and insure energy and sell it above the cap. These new measures are a response to the Kremlin’s efforts to evade the price limit. Treasury Secretary Janet Yellen is expected to discuss the price cap and its enforcement with her G7 counterparts in Marrakech this week.
