US sanctions two companies for violating Russian oil price cap

The U.S. Treasury Department imposed sanctions against two companies and two of their tankers for transporting Russian crude oil at a price higher than the $60-per-barrell cap, the department announced on Oct. 12.

The restrictions apply to the United Arab Emirates-based Lumber Marine SA and its vessel SCF Primorye, which reportedly carried Russian crude priced over $75 per barrel.

They also targeted Turkey-based Ice Pearl Navigation Corp and its YasaGolden Bosphorus tanker, reportedly transporting Russian oil at a price over $80 per barrel.

This is the first case of Washington applying sanctions against an entity over the violation of the price cap imposed by the U.S., the EU, the Group of Seven (G7), and Australia in December 2022.

The measure was designed to ensure that sufficient supplies of crude oil continue to flow to global markets while at the same time limiting Russia's revenue.

As most providers that offer maritime shipping insurance and other crucial services are based in the countries of the so-called Price Cap Coalition, this gives the West and its allies leverage to enforce the measure.

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According to the department's press release, the two sanctioned vessels were using providers based in the coalition countries.

"Today's action demonstrates our continued commitment to reduce Russia's resources for its war against Ukraine and to enforce the price cap," said Deputy Treasury Secretary Wally Adeyemo.

"We remain committed to implementing a price cap policy that has two goals: reducing the oil profits upon which Russia relies to wage its unjust war against Ukraine and keeping global energy markets stable and well-supplied despite turbulence caused by Russia's unprovoked invasion of Ukraine."

Russia has been successful at bypassing the price cap by building up a so-called "dark fleet" of oil tankers operating without Western insurance or other services.

According to the Financial Times, almost three-quarters of Russian seaborne crude traveled without Western insurance in August.

In combination with a steady rise in crude prices, almost up to $100 per barrel, Moscow's oil sales profits are continuing to grow.