US charges three more tankers with busting oil price cap sanctions, warns 30 more companies
The US Office of Foreign Assets Control (OFAC) has charged three more UAE-flagged tanker with busting sanctions by ignoring the $60 oil price cap and issued warning letters to 30 more shippers operating more than 100 vessels that are suspected of engaging in “suspicious activities,” it was reported on November 16.
“Shipping companies and vessels participating in the Russian oil trade while using Price Cap Coalition service providers should fully understand that we will hold them accountable for compliance,” Deputy Treasury Secretary Wally Adeyemo said in a statement. “We are committed to maintaining market stability in spite of Russia’s war against Ukraine, while cutting into the profits the Kremlin is using to fund its illegal war and remaining unyielding in our pursuit of those facilitating evasion of the price cap.”
The secondary sanctions will freeze any US assets of those targeted and bars Americans from dealing with the companies in any way.
The UAE-based firms targeted are: Kazan Shipping Incorporated, Progress Shipping Company Limited and Gallion Navigation Incorporated, Reuters reports. Some Liberian-flagged ships were also hit with the sanctions: the Kazan, Ligovsky Prospect and NS Century, according to the Treasury Department.
OFAC sanctioned the first two tankers in October for carrying Russian oil that cost more than the $60 price cap as the West ramps up efforts to make the sanctions scheme work that is designed to limit the Kremlin’s revenues from oil exports, but at the same time keep the market supplied with oil.
However, the scheme has largely failed. The Peterson Institute for International Economics (PIIE) and Kyiv School of Economics (KSE) have documented widespread cases of EU-flagged tankers simply ignoring the sanctions, especially in the Pacific Ocean, where the ships, many of which are Greek, do not sail through EU-controlled waters. As bne IntelliNews reported, oil price sanctions are a spent cannon.
The latest move by the US to enforce the sanctions comes as the EU is due to release details of a twelfth sanctions package that includes measures to better enforce existing sanctions.
Data from marine intelligence firm Kpler suggest that 30% of Russian exports from Western ports continue to employ commercial shipping with beneficial ownership within the European Union. In addition, Russia employs a large shadow fleet that operates entirely outside the sanctions regime.
A total of five tankers have now been sanctioned by the US for ignoring the oil price cap, but analysts believe a widespread and aggressive campaign to stamp out the sanctions busting remains unlikely, as the US is concerned with restricting the supply of oil that would send prices spiking. So far, oil price sanctions remain largely symbolic, after Russia successfully redirected the majority of its oil exports to Asia – mostly to China and India.
While the vessels and shipping companies recently sanctioned for transporting Russian oil above the price cap are likely to have Russian ties, many ship-owners may make a "safe harbour" case based on OFAC’s guidelines.
Matthew Wright, lead analyst of freight at marine intelligence firm Kpler, told NBC: "Based on the history of these fleets, these [UAE-flagged] vessels were all owned and operated by [Russian state-owned shipping giant] Sovcomflot. Management of all the Sovcomflot ships was transferred to Sun Ship Management in March/April 2022 when their offices in Europe were closed. Those three companies are now managed by a new manager called Oil Tankers SCF Management, but it's just another name. Ownership hasn't changed since 2006. They're not part of either the dark or grey fleet really, as I consider them still Russian-owned."
Separately, more sanctions were also imposed on eight people and six entities from Bosnia, North Macedonia and other Balkan countries accused of corruption and enabling Russian malign influence in the region. Some Bosnian politicians were included, as well as leading figures in organised crime in Montenegro and firms and executives in North Macedonia tied to sanctioned Russians.
Brian Nelson, the Treasury’s undersecretary for terrorism and financial intelligence, said: “Russia has continued to use its influence in the Western Balkans to stymie the region’s integration into international institutions and organisations, as well as leverage key jurisdictions to facilitate its aggressive destabilising activities,” AP reported.