White House Plans New Sanctions on Russian Oil Exports

The Biden administration is set to announce today new sanctions on Russia targeting specifically its oil exports after multiple reports that Russian crude was selling at a significant premium to the G7 price cap of $60.

CNN reported that the target of the new set of sanctions would be the so-called dark fleet of tankers carrying Russian crude around the world without going into details. The report cited an unnamed senior administration official who said these sanctions had been in the making for several months.

The G7 and the European Union agreed to cap Russian oil transported on Western-registered vessels and insured at Western insurers at $60 per barrel. However, since spring there have been reports that Russian crude was selling above the cap.

With the latest price rally, the gap between the price cap and the actual price, at which Russia was selling oil and fuels widened so much that Washington was prompted to make a statement after months of assurances the cap was working in curbing Russia’s oil revenues.

Eventually, Treasury Secretary Janet Yellen was forced to admit the cap was not as effective as expected, vowing to improve enforcement of the sanctions.

“We are looking at enforcement very carefully, and we want to make sure that market participants are aware we take this price cap seriously, and, to the extent Western services are used, we mean business about abiding by the cap,” Yellen said this week, as quoted by the Washington Examiner.

She did not go into details on how this enforcement would be improved but alleged Russian oil revenues had fallen sharply over the past ten months thanks to the price cap. The latest data on Russian crude is that a barrel of Urals sold for $85 per barrel in September. At the time of writing, this had fallen to $75 – still well above the G7 cap.