U.S. sanctions shipping companies for violating Russian oil The Treasury Department sanctioned two shipping companies Thursday for violating a $60-per-barrel price cap on Russian oil, marking the first penalties intended to enforce what experts say is a widely flaunted rule.
The price cap was put in place starting December 2022 with the intent of starving the Russian economy and war machine of oil revenue amid president Vladimir Putin’s invasion of Ukraine. It is backed by a coalition that includes the G7 group of nations, which include Canada, France, Germany, Italy, Japan, the United Kingdom and United States, as well as the European Union.
The Treasury Department’s Office of Foreign Asset Control (OFAC) is imposing penalties against Ice Pearl Navigation Corp., a Turkish shipping firm, for transporting Russian crude oil priced above $80 per barrel. It also sanctioned Lumber Marine, a shipping company based in the United Arab Emirates.
As a result of the sanctions, both companies are “blocked” by OFAC, prohibiting any U.S. person or entity from paying or trading for their goods or services.
The agency left open the possibility that the blocks could be removed for good behavior. “The ultimate goal of sanctions is not to punish, but to bring about a positive change in behavior,” OFAC wrote in its Thursday release.
Officials cast the sanctions as a warning to other shippers.
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“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,” Deputy Treasury Secretary Wally Adeyemo said in a release, adding: “We will continue to take actions to achieve these two goals.”
Other entities are known to have carried Russian oil priced above the cap, the Treasury Department said.
The sanctions against Ice Pearl are related to an April 17 notice stating that OFAC is aware of reports that Eastern Siberia Pacific Oil (ESPO), which originates from Pacific ports in Russia, was trading over the price cap. The Treasury Department’s Thursday press release states that the Yasa Golden Bosphorus, owned by Ice Pearl, had carried ESPO oil priced above $80 per barrel after the cap was imposed.
Lumber Marine is accused of carrying oil priced above $75 per barrel on a ship called the SCF Primorye, a crude oil tanker registered in Liberia which took oil from the Novy Port in a northern section of Russia.
The G7 put out their own statement pledging that “Our Coalition takes all allegations of evasion and illicit activity seriously, and all Coalition members will respond as appropriate if industry players violate our rules.”