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Treasury Targets Firms Ignoring $60 Cap On Russian Crude

  • The sanctions target UAE's Lumber Marine and Turkey's Ice Pearl Navigation Corporation for trading Russian oil above the set price cap.
  • The price cap was enforced by Western countries to limit Russian revenue, potentially funding its invasion of Ukraine, while ensuring oil supply continuity.
  • The G7 and Australia report a 45% drop in Russian oil tax revenue from January-August compared to the previous year, underscoring the impact of the cap.
Oil Tanker

The U.S. Treasury Department has announced sanctions on two companies for allegedly violating a price cap on Russian oil agreed last year by Western countries.

Vessels owned by companies based in the United Arab Emirates and Turkey were cited as having violated a price cap set in December by the countries in the Group of Seven leading economies, the European Union, and Australia.

The coalition set the price cap at $60 per barrel for Russian crude to restrict income for Russian oil that could then be used to fund its invasion of Ukraine.

A vessel owned by U.A.E.-based Lumber Marine was found to have violated price-cap policy, the U.S. Treasury Department said in a news release. The vessels carried Russian-origin crude priced at more than $75 a barrel, the Treasury said in a statement on October 12.

The department also sanctioned Turkey-based Ice Pearl Navigation Corporation, saying one it its vessels carried crude oil priced above $80 a barrel.

Global oil prices have risen to around $85 a barrel in recent months.

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

The cap bans Western companies from providing maritime services such as insurance, finance, and shipping to Russian seaborne oil exports sold above $60 a barrel. The coalition implemented the program to restrict Russian revenue while keeping oil flowing to markets.

Both tankers used U.S.-based service providers while transporting the Russian origin oil, the Treasury Department said.

"Because of the actions we're announcing today, and the further actions we will take in the coming weeks and months, these costs will continue to rise and Russia's ability to sustain its barbaric war will continue to weaken," a senior Treasury official told reporters in a conference call.

U.S. Treasury Secretary Janet Yellen on October 11 said the price cap had sharply reduced Russian revenues over the past 10 months and that it was critical to keep imposing severe and increasing costs on Russia over its war in Ukraine.

Since the establishment of the price-cap policy, the coalition has closely monitored markets, including price trends and volumes exported by Russia, a statement from the G7 and Australia said.

Russian oil tax revenue was down 45 percent from January-August this year, relative to 2022, the statement said.

"Given recent price movements, the coalition is focusing on supporting compliance and enforcement of the policy," it said, adding that when it has evidence of illicit or deceptive practices related to shipments of Russian-origin crude oil, it will "respond in accordance with the respective restrictive measures."

The International Energy Agency (IEA) said on October 12 that preliminary estimates showed Russian crude oil exports last month stood at 4.9 million barrels per day, down about 100,000 bpd from the May-June average.

But it also said Russia's total exports of crude oil and products in September rose by 460,000 bpd to 7.6 million bpd, with crude accounting for 250,000 bpd of the increase.


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  • Mamdouh Salameh on October 13 2023 said:
    The G7 price cap is dead and buried. No one can resurrect the dead.

    By targeting companies ignoring the $60 cap on Russian crude, the US Treasury is merely admitting the futility and the utter failure of the cap.

    Meanwhile, Russia is laughing all the way to the bank.

    Dr Mamdouh G Salameh
    International Oil Economist
    Global Energy Expert

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