U.S. and Allies Intensify Pressure with Further Sanctions on Russian Oil
The United States, European Union, and the United Kingdom are exerting pressure on Liberia, the Marshall Islands, and Panama to enhance oversight of ships flying their flags, ensuring they do not transport Russian oil exceeding the established $60 price cap. This move represents a further escalation in Western efforts to enforce the price cap on seaborne shipments of Russian oil as a punitive measure for Moscow’s actions in Ukraine.
The price cap, implemented in late 2022 to diminish Russia’s export revenues while maintaining global oil flows, has only recently been rigorously enforced. It prohibits Western companies from providing maritime services facilitating the trade of Russian oil sold above the cap, including transportation, insurance, and finance.
To bypass sanctions and the price cap, Russia has increasingly relied on an aging fleet of tankers, referred to as a “ghost fleet,” to transport oil to countries such as China and India. This practice, known as “flag hopping,” involves using flags of countries like Panama, the Marshall Islands, and Liberia, allowing some shell companies trading Russian oil to evade sanctions.
The letters sent to Liberia, the Marshall Islands, and Panama aim to warn against the increased circumvention of the G7’s price cap on Russian oil. They highlight the elevated risk associated with vessels lacking Western insurance and other services, seeking alternative flags.
The objective is not to reduce the number of ships carrying Russian oil but to enhance compliance with the cap, making it more expensive for Russia to move oil without Western shipping services. Additionally, it aims to provide leverage to countries buying oil outside the price-cap coalition to secure discounted oil from Russia.
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Panama has historically been responsive to U.S. requests regarding illicit activities. The group is urging Liberia and the Marshall Islands to raise awareness within the trade that their flags should not be used for tankers transporting oil priced above the cap.
The letters were reportedly signed by Lindsey Whyte, head of international finance at Britain’s Treasury; John Berrigan, head of the European Commission’s financial services unit; and Brian Nelson, the top terrorism financing official at the U.S. Treasury. As of the report, responses from the embassies and relevant authorities had not been received.
