US imposes sanctions for transporting oil sold above price cap

The US Department of the Treasury’s Office of Foreign Assets Control (OFAC) reported this on October 12.

OFAC has imposed sanctions on two entities that transported Russian oil in violation of the G7 price cap of $60 per barrel. OFAC is also blocking the ownership of two tankers that were used to supply oil in violation of the restrictions. 

The sanctions targeted the shipping company Lumber Marine SA from the United Arab Emirates and Turkey's Ice Pearl Navigation Corp. 

Lumber Marine was transporting Russian Arctic Novy Port crude oil at a price of $75 per barrel by SCF Primorye tanker, and the Turkish company was transporting ESPO crude oil at a price of more than $80 per barrel by Yasa Golden Bosphorus tanker.

“Today’s action demonstrates our continued commitment to reduce Russia’s resources for its war against Ukraine and to enforce the price cap,” said Deputy Secretary of the Treasury Wally Adeyemo. 

“We remain committed to implementing a price cap policy that has two goals: reducing the oil profits upon which Russia relies to wage its unjust war against Ukraine and keeping global energy markets stable and well-supplied despite turbulence caused by Russia’s unprovoked invasion of Ukraine. We will continue to take actions to achieve these two goals,” he added.

What is the Price Cap Coalition?

The United States is part of an international coalition (the Price Cap Coalition), including the G7, the European Union, and Australia, that have agreed to prohibit the import of crude oil and petroleum products of Russian Federation origin. 

These countries have also agreed to restrict a broad range of services related to the maritime transport of crude oil and petroleum products of Russian Federation origin — unless that oil is bought and sold at or below the specific price caps established by the Coalition. This policy is known as the “price cap.” 

The price cap is intended to maintain a reliable supply of crude oil and petroleum products to the global market while reducing the profits the Russian Federation earns from oil after its own war of choice against Ukraine inflated global energy prices.