US Introduces New Costs for Russian Evasion of Oil Price Cap

Title: Biden Administration Imposes New Measures to Raise Costs on Russia’s Oil

In a bid to exert pressure on Russia and curb its military capabilities, the Biden administration has implemented new measures to increase the cost of Russian oil that exceeds the agreed price limit. The US Treasury Department is now imposing sanctions on two entities and identifying two vessels as blocked property for utilizing price cap coalitions services providers while transporting Russian crude oil above the coalition-agreed price gap.

The primary objective behind these measures is to force Russia into more expensive options and prevent them from utilizing the generated revenue for military equipment. Specifically, the new sanctions target the illicit fleet of ships that Russia has assembled to transport and sell its oil above the price limits set by Western nations.

The Biden administration has expressed its intention to significantly escalate Russia’s costs in the subsequent phase. In support of this stance, the G7 price cap coalition has issued a joint statement emphasizing the risks associated with violating price cap rules.

It is important to note that the policy process leading to these measures has been in progress for several months. In December 2022, the United States, along with its G7 allies and Australia, banned the purchase of Russian oil exceeding $60 per barrel if it was shipped, insured, or financed by Western nations.

However, the Kremlin has managed to establish workarounds to continue selling oil above the agreed price cap, which has diminished the effectiveness of the limit. Recognizing this challenge, Treasury Secretary Janet Yellen plans to discuss the price cap and its enforcement with her G7 counterparts during the upcoming Marrakech meetings.

Yellen acknowledges that the implemented policy has indeed reduced Russia’s revenue. Nevertheless, she also recognizes Russia’s investments in alternative means of exporting energy products, highlighting the need for continued vigilance to ensure the price cap remains effective.

The Biden administration’s newest measures aim to further tighten the grip on Russia’s oil industry, effectively pushing the country towards compliance with price limits while also restricting its financial resources for military ventures. As the situation unfolds, it remains to be seen how Russia will respond and whether these actions will ultimately achieve the desired outcomes.