US Sanctions Sovcomflot Tanker Group to Curb Russia’s Oil Revenue

The United States has imposed sanctions on Russia’s leading tanker group, Sovcomflot, in an effort to reduce Russia’s revenue from oil sales that could be used to support its invasion of Ukraine. Russia is one of the world’s largest oil exporters, and these sanctions are part of Western efforts to increase the cost of shipping crude oil and oil products while maintaining the flow of petroleum to global markets. The Treasury Department has designated 14 crude oil tankers as property in which Sovcomflot has a stake and issued general licenses allowing offloading of cargo from these ships for 45 days.

According to a senior Finance Ministry official, Sovcomflot was involved in price cap violations and fraudulent activities. The sanctions freeze all US assets of the targets and generally prohibit Americans from dealing with them. Previously, the G7, the EU, and Australia introduced an oil price cap for Russian oil to reduce revenue that could be used for war, leading to Russia relying on a shadow fleet of aging tankers. The US has also imposed sanctions on over 500 people and organizations in retaliation for Russia’s invasion of Ukraine and the death of opposition leader Alexei Navalny.

The Treasury Department’s increasing enforcement of sanctions has forced Russia to sell oil at a wider discount to international benchmark Brent crude, limiting the country’s revenue. The discount on Russian oil compared to Brent crude widened to about $19 a barrel last month, up from $12 to $13 a barrel in October. So far, the US has imposed sanctions on 27 tankers for price cap violations, leading to many of them being anchored at ports. This intensified enforcement is part of broader efforts to restrict Russia’s financial resources.

Source .