In a move that has further heightened supply concerns, oil prices surged by 4% after the United States tightened sanctions on Russian crude exports. The US government imposed these sanctions on two shipping companies that violated the G7’s oil price cap, which aimed to limit Russian flows in the market while curbing Russia’s war funding. The international benchmark Brent crude futures for December rose by 3.9% to $89.34 per barrel, while the front-month November US West Texas Intermediate crude futures increased by 4.1% to trade at $86.28 per barrel.
The sanctions enforced by the US Treasury Department’s Office of Foreign Assets Control targeted two tankers carrying Russian oil priced above the G7’s price cap. One tanker, owned by Turkey-based Ice Pearl Navigation Corp, transported crude oil priced above $80 a barrel. The other vessel, owned by UAE-based Lumber Marine SA, carried Russian oil priced above $75 a barrel from a Russian port. The US government’s goal in implementing these sanctions is to reduce the oil profits relied upon by Russia for its war against Ukraine, while striving to maintain stability in global energy markets.
These measures are part of an ongoing effort by the G7, Australia, and the EU to curtail the export revenue that funds Russia’s war in Ukraine. Last year, a $60-per-barrel price cap on Russian oil was established, accompanied by a ban on seaborne imports of Russian oil by the EU and UK. The recent move by the US reflects its commitment to working with international partners to responsibly reduce Russian government oil profits. By tightening sanctions against Russian crude exports, the US aims to constrain the Russian war machine and limit its resources for the ongoing conflict in Ukraine.
