US Ramps Up Pressure on Russia With Fresh Energy Sanctions

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(Bloomberg) — The United States imposed its toughest sanctions on the Russian oil industry yet as the Biden administration looks for last-minute ways to bolster Ukraine’s influence in potential peace negotiations after Donald Trump takes office.

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The measures announced on Friday targeted two companies that handle more than a quarter of Russia’s seaborne oil exports, as well as insurance companies and vital traders linked to hundreds of shipments. The United States also expanded sanctions on tankers that had already proven devastating.

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Treasury Secretary Janet Yellen said in a statement that these moves are intended to “escalate the sanctions risks associated with Russian oil trade, including shipping and financial facilities to support Russian oil exports.”

Friday’s actions go beyond previous sanctions measures imposed by the United States on Russia as part of efforts to strangle its war machine after the invasion of Ukraine in 2022. While Trump could lift the sanctions at any time, he may find it politically unpalatable to lift them. . I do so given the broad bipartisan support in Washington for Ukraine.

The main target of the sanctions, which were implemented in coordination with the UK, are major Russian energy companies – Gazprom Neft and Surgut Neftegaz. Data compiled by Bloomberg showed that the two companies exported about 970,000 barrels per day of oil by sea in the first 10 months of 2024, about 30% of the country’s total tanker flows.

The United States also imposes sanctions on more than two dozen companies affiliated with these companies, as well as more than 180 ships, many of which are linked to Russia’s so-called shadow fleet. The latest measure doubles the number of targeted oil tankers. There are currently 135 tankers sanctioned by the EU, UK and US, with many blacklisted by a combination of all three.

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These moves appear likely to disrupt the country’s oil exports and Moscow’s supply chain. The global oil market is preparing to achieve a surplus of about one million barrels per day this year, but the material loss in Russian supplies will affect this.

Of all the sanctions imposed on Russian oil trade, those imposed by the United States have proven to be the most effective. Before Friday, OFAC had identified 39 tankers carrying Russian oil since October 2023. Only six tankers had subsequently lifted cargoes, according to ship-tracking data compiled by Bloomberg.

Sanctions are also being imposed on major oil traders, oilfield service providers, insurance companies and energy officials.

Targeting Moscow-based insurer Ingosstrakh in particular will raise questions about the broader protection of tankers transporting the country’s oil against risks including spills, collisions and – more recently – damage to submarine cables. Ingosstrakh plays a pivotal role in covering ships carrying Russian cargoes to India, and its role in the oil export trade grew after the start of the war in Ukraine, an investigation by Bloomberg and Danwatch, a Danish non-profit, showed in October.

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The United States also imposes sanctions on Rosneft Float, the shipping arm of Russian oil company Rosneft. Rosneft itself is subject to some previous restrictions, but they were not specifically mentioned in this new round of sanctions.

Earlier: Zelensky urges allies not to ‘drop the ball’ on support for war

The US Treasury Department said, separately, that the US State Department had imposed sanctions on two liquefied natural gas projects as well as a major Russian oil project.

The new measures fit into broader efforts by the Biden administration to increase Ukraine’s bargaining power if it is forced to enter into peace talks with Russia after Trump takes office. Another US official told reporters that the White House informed Trump’s transition team of their plans, but did not coordinate with the incoming administration.

Trump said Thursday evening that a meeting with Putin was being arranged. At a meeting with Republican governors at his Mar-a-Lago resort in Florida, the president-elect told a reporter that the Russian leader “wants to meet.” Trump said any such meeting, if it occurs, would come after his inauguration.

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Senior Biden administration officials told reporters on Tuesday that the measures, which are expected to cost Russia billions of dollars a month, are likely to lead to inflation and make it difficult for President Vladimir Putin to continue financing the invasion, giving Ukraine strength to remain on the battlefield. Call preview action.

The United States refrained from imposing direct sanctions on the Russian energy sector, but began escalating measures against the sector in November by imposing sanctions on Gazprombank, which European countries used to pay for the natural gas they buy from Russia. Officials in Türkiye and Hungary later said they had received exemptions from sanctions on the bank so they could continue paying for gas imports.

In the months following the February 2022 invasion, the G7 came up with an alternative to traditional sanctions, imposing a cap on the price of Russian oil at $60 per barrel. Officials were concerned at the time about rising inflation, which had reached high levels in the wake of the coronavirus pandemic. Anyone who pays more than this price cannot use Western services such as carrier insurance.

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The oil market and global economy are now more robust, giving officials greater freedom when it comes to striking the Russian energy industry.

Since the price cap was implemented, Russia has proven adept at finding new markets for its oil, selling more to China and India and assembling a fleet of old tankers to ship it.

The sanctions were scheduled to be announced during President Joe Biden’s trip to Europe this week, which was scheduled to include a meeting with Ukrainian leader Volodymyr Zelensky. But Biden chose to remain in Washington to focus on the wildfire disaster in Southern California.

– With assistance from Siren Cheung and Rakesh Sharma.

(Updates with sanctions details, Treasury statement)

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