The United States on Thursday imposed sanctions on two shipping companies for violating the oil price cap imposed by the Group of Seven to deprive Russia of revenue from energy exports through evasion and loopholes.
The sanctions came at a time of renewed concern over global energy prices after Hamas’ attack on Israel over the weekend threatened to become a regional conflict. The price cap was introduced late last year to prevent Russia from profiting from rising energy prices by limiting its ability to sell oil using Western insurance and financing.
The cap was set so that Russian oil could not be sold through these services for more than $60 per barrel.
The Treasury Department imposed sanctions on Lumber Marine, a shipping company based in the United Arab Emirates, for transporting crude oil at a price above $75 a barrel from a Russian port after the cap was imposed. It also imposed sanctions on Ice Pearl Navigation Corporation, a Turkish shipping company, for transporting Russian crude oil at a price of more than $80 a barrel.
Inclusion on the US sanctions list could mean that both companies can no longer participate in global oil trading.
“Today’s action demonstrates our continued commitment to reducing Russia’s resources for its war against Ukraine and enforcing the price cap,” Wally Adeyemo, the deputy treasury secretary, said in a statement.
The Treasury and the rest of the G7 have been closely watching how oil markets reacted to the price cap. They consider it successful largely because oil prices have not skyrocketed and officials believe Russian oil profits have been hit because the Kremlin has had to make large investments to build a “shadow” shipping fleet and alternative financial services providers.
The G7 and Australia, which is also part of the so-called price cap coalition, said in a joint statement that they were united in their work to enforce the cap.
“If we have evidence that companies or individuals have committed illegal or fraudulent practices related to shipments of crude oil and petroleum products of Russian origin, we will respond,” the statement said.
US officials have warned shipping companies of possible violations. The Treasury Department on Thursday described its move as a new phase of price cap enforcement.
“We will not tolerate evasion and we are looking at it very closely,” Treasury Secretary Janet L. Yellen said in an interview with The New York Times this week. “To the extent that circumvention occurs, we certainly need to take steps to address it, and you should expect us to do the same.”