US and UK toughens sanctions on Russian oil industry
The Biden administration has imposed some of its most stringent sanctions on Russia, aimed at targeting Moscow’s energy revenue, which is financing its war in Ukraine.
The sanctions affect over 200 entities and individuals, including traders, officials, insurance companies, and hundreds of oil tankers.
In a first since Russia’s full-scale invasion of Ukraine, the UK will join the US in directly sanctioning Russian energy companies Gazprom Neft and Surgutneftegas.
“Challenging Russian oil companies will drain Russia’s war funds – every ruble taken from Putin helps save Ukrainian lives,” said Foreign Secretary David Lammy.
Some of the measures announced by the US Treasury will become law, meaning the incoming Trump administration will need to involve Congress if it seeks to lift them.
Washington is also moving to severely restrict who can legally purchase Russian energy and is targeting what it calls Moscow’s “shadow fleet” of vessels involved in transporting oil globally.
US Treasury Secretary Janet Yellen stated that these actions are “increasing the sanctions risk tied to Russia’s oil trade, including shipping and financial facilitation supporting Russian oil exports.”
President Joe Biden remarked that Russian President Vladimir Putin is in “tough shape,” emphasizing that “it’s crucial he has no room to continue committing the horrific acts he does.”
Ukraine’s President Volodymyr Zelensky thanked the US for its “bipartisan support.”
Since the onset of the war in Ukraine, a price cap on oil has been a primary measure to curb Russia’s energy exports. However, as Olga Khakova of the Atlantic Council’s Global Energy Centre noted, its effectiveness had been “diluted” due to efforts to prevent a significant reduction in Rthe ussian oil supply, which could harm the global economy.
Experts now argue that the oil market is in a stronger position.
“US oil production (and exports) are at record levels and rising, so the price impact of removing Russian oil from the market, the goal of today’s sanctions, will be lessened,” said Daniel Fried, a distinguished fellow at the Atlantic Council.
“The US government has taken a major step against the Russian oil sector, potentially delivering a significant blow,” Fried added.
John Herbst, a former US ambassador to Ukraine, said while the steps were “excellent”, their implementation would be critical.
“Which means that it is the Trump administration that will determine if these measures do put pressure on the Russian economy,” he said.
