The Biden administration is set to announce new measures to raise the cost of Russia’s attempts to skirt a limit set on the price for its oil, senior administration officials told CNN, as the West aims to enforce more strictly a price cap first introduced nearly a year ago.
“Today, the US Treasury Department is imposing sanctions on two entities and identifying as blocked property two vessels that use price cap coalitions services providers while carrying Russian crude oil above the coalition-agreed price gap,” a senior official briefing reporters Thursday said.
“Taking the steps is sending a clear message to Russia that we will continue to be focused on forcing them into two costly options. And attempts to expand beyond them will face a decisive and unified response,” the official added, as the US and its allies have determined that the price cap is unequivocally “diverting Russia’s money that could be spent on tanks, armored vehicles, and other equipment for use on the battlefield.”
The new sanctions, part of a series of actions announced Thursday, would primarily target the illicit fleet of ships the Kremlin has built up in the last year for the purpose of transporting its oil and oil products and selling them above price limits put in place by the West.
The Biden administration is “looking to make sure that their (Russia’s) costs go up significantly in this next phase,” the official briefing reporters said.
Additionally, the senior official briefing reporters said, the G7 price cap coalition is reiterating in a new joint statement the risk of violating price cap rules.
A senior administration official told CNN the policy process has been underway for several months.
In December 2022, the United States, G7 allies and Australia banned the purchase of Russian oil above the price of $60 per barrel if it was shipped, insured or financed by the West. The policy’s goal was to cut off revenues to Russia – used to fund the country’s invasion of Ukraine – while still keeping enough oil on the market to limit disruptions for global consumers.
But the Kremlin began establishing a workaround by sourcing other means to ship and insure energy and sell it above the cap. In early October, Treasury Secretary Janet Yellen told reporters that recent market prices for Russian oil suggested there had been a “reduction in effectiveness” of the price cap.
Yellen is expected to discuss the price cap and its enforcement with her G7 counterparts in Marrakech this week, where the International Monetary Fund and World Bank are holding their annual meetings.
Speaking from Marrakech, Yellen said the policy had “significantly reduced Russian revenue,” while also acknowledging Russia was spending “huge amounts on its alternative ecosystem” to export energy products.