US and UK toughen sanctions on Russian oil industry

The Biden administration has imposed some of its toughest sanctions yet on Russia, in a move designed to hit Moscow’s energy revenue that is fuelling its war in Ukraine.

The measures target more than 200 entities and individuals ranging from traders and officials to insurance companies, as well as hundreds of oil tankers.

In a first since Moscow’s all-out invasion of Ukraine, the UK will join the US in directly sanctioning energy companies Gazprom Neft and Surgutneftegas.

“Taking on Russian oil companies will drain Russia’s war chest – and every ruble we take from Putin’s hands helps save Ukrainian lives,” said Foreign Secretary David Lammy.

Some of the measures announced by the US Treasury on Friday will be put into law, meaning the incoming Trump administration will need to involve Congress if it wants to lift them.

Washington is also moving to severely limit who can legally purchase Russian energy, and going after what it called Moscow’s “shadow fleet” of vessels that ship oil around the world.

US Treasury Secretary Janet Yellen said the actions were “ratcheting up the sanctions risk associated with Russia’s oil trade, including shipping and financial facilitation in support of Russia’s oil exports.”

President Joe Biden said Russian leader Vladimir Putin was in “tough shape”, adding that “it’s really important that he not have any breathing room to continue to do the god-awful things he continues to do.”

“It is probable that gas prices [in the United States] could increase as much as three or four cents a gallon,” said the president.

But, he added, the measures were likely to “have profound effect on the growth of the Russian economy”.

Ukraine’s president, Volodymyr Zelensky, thanked the US for what he called its “bipartisan support”.

Since the beginning of the war in Ukraine, a price cap on oil has been among the key measures designed to curb Russia’s energy exports.

But as Olga Khakova from the Atlantic Council’s Global Energy Centre explained, its effectiveness was “diluted” because it was also trying to avoid the volume of Russian oil in the market dropping.

This was due to concerns about the impact reduced supply would have on the global economy.

But experts said the oil market was now in a healthier position.

“US oil production (and exports) are at record levels and rising, and therefore the price impact of taking Russian oil off the market, the objective of today’s sanctions, will be attenuated,” said Daniel Fried, a distinguished fellow at the Atlantic Council.

“The US government has gone after the Russian oil sector in a big way, intending to deal what may turn out to be a body blow,” Fried added.

John Herbst, a former US ambassador to Ukraine, said while the steps were “excellent”, their implementation would be critical.

“Which means that it is the Trump administration that will determine if these measures do in fact put pressure on the Russian economy,” he said. (BBC News)