The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) has taken action by imposing sanctions on two entities and identifying two vessels as blocked property. These entities and vessels have been involved in transporting Russian crude oil above the price cap set by the Price Cap Coalition. This move is part of the Treasury Department’s collaborative efforts with international partners to responsibly reduce Russia’s government oil profits and limit its military capabilities. The Treasury, along with the coalition, remains vigilant in monitoring shipping companies and vessels engaged in the Russian oil trade through Price Cap Coalition service providers.
Coalition Advisory for the Maritime Oil Industry
- In addition to the sanctions, the Price Cap Coalition has issued an advisory aimed at both government and private sector participants in the maritime trade of crude oil and refined petroleum products. This advisory offers specific best practices and underscores the commitment to responsible industry practices, disrupting sanctioned trade, and enhancing compliance with the price cap.
Statement from Deputy Secretary of the Treasury
- Deputy Secretary of the Treasury, Wally Adeyemo, emphasized the commitment to two primary goals: reducing Russia’s oil profits, which support its war in Ukraine, and maintaining stability in global energy markets despite the turmoil caused by Russia’s invasion of Ukraine.
Overview of the Price Cap Policy
- The Price Cap Coalition comprises countries such as the G7, the European Union, and Australia, which have collectively agreed to prohibit the import of Russian crude oil and petroleum products.
- The coalition has also imposed restrictions on various services related to the maritime transport of Russian crude oil and petroleum products, with the condition that the oil is sold at or below specific price caps agreed upon by the coalition.
- The goal of this policy, known as the “price cap,” is to ensure a reliable supply of crude oil and petroleum products to global markets while reducing Russia’s oil profits, which have surged due to increased energy prices following its invasion of Ukraine.
Specifics of the Crude Oil Price Cap
- The crude oil price cap came into effect in December 2022, with a set cap of $60 per barrel for Russian crude oil.
- The sanctions involve entities and vessels that transported Russian crude oil priced above the $60 per barrel cap.
- The SCF Primorye vessel carried Novy Port crude oil exceeding $75 per barrel after the price cap was in place. The vessel is owned by United Arab Emirates-based Lumber Marine SA.
- The Yasa Golden Bosphorus vessel transported ESPO crude oil priced above $80 per barrel after the cap was enforced. The vessel is owned by Turkiye-based Ice Pearl Navigation Corp.
Sanctions Implications
- As a result of these sanctions, any property and interests in property of the designated entities and vessels located in the U.S. or under the control of U.S. persons are blocked and must be reported to OFAC.
- Entities that are directly or indirectly owned by 50% or more by blocked persons are also subject to sanctions.
- Transactions involving property or interests in property of designated or blocked persons by U.S. persons or within the United States are prohibited unless authorized by OFAC.
Objective of Sanctions
- It is crucial to note that the ultimate goal of OFAC sanctions is to bring about positive changes in behavior and not merely to punish. The process for seeking removal from an OFAC list is outlined for those who wish to follow it.
The Treasury Department, in collaboration with international partners, remains committed to its objectives of reducing Russia’s war-related profits and ensuring global energy market stability amid ongoing developments in Ukraine.
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