US imposes first sanctions on Russia because of oil price cap

In order to reduce Moscow’s revenue following its invasion of Ukraine, the United States said on Thursday that it is implementing sanctions on two firms for breaking a ceiling on the price of Russian petroleum.

In order to limit Russia’s oil earnings while guaranteeing that it continues to supply the global market, a coalition of the Group of Seven major nations, the European Union, and Australia agreed a price ceiling of $60 per barrel of Russian crude in December.

According to the US Treasury Department, a vessel operated by Lumber Marine with headquarters in the United Arab Emirates was discovered to have broken this rule by transporting petroleum with a price tag of more than $75 a barrel.

The government also penalized Turkey-based Ice Pearl Navigation Corp, whose ship transported crude oil with a price tag of more than $80 per barrel.

When carrying the oil with a Russian origin, both boats engaged US-based service providers; thus, the sanctions may have an effect on the firms’ participation in international commerce.

In a statement, Deputy Treasury Secretary Wally Adeyemo stated, “Today’s action demonstrates our continued commitment to reduce Russia’s resources for its war against Ukraine and to enforce the price cap.”

Russia’s oil tax income was reported to have decreased by 45% between January and August of this year compared to the same time in 2022 in a separate notification from the G7 and Australia.

According to the statement, “where we have evidence that companies or individuals have engaged in illegal or misleading practices related to shipments of crude oil and petroleum products of Russian origin, we will respond.”

According to a Treasury official who spoke to reporters on the condition of anonymity, authorities will keep collaborating with business while also taking visible steps to better regulate the market.

The recent action, according to the source, marks a new stage in activities related to the price restriction.