European countries are ramping up sanctions pressure on Russia as they look to reduce Vladimir Putin’s oil revenues that fund the war in Ukraine.
The UK and the European Union announced this week a raft of new sanctions that target Russia’s shadow fleet of tankers enabling oil trade.
The UK went further, sanctioning two trading firms, which it described as “key lynchpins in enabling the trading of Putin’s precious oil.”
Moreover, the UK and other countries around the North Sea and the Baltic Sea are stepping up efforts to check insurance certificates to challenge suspected shadow vessels along the Russian oil export route from its Baltic Sea ports to the North Sea and the Atlantic.
All these new sanctions and measures are aimed at clamping down on the shadow fleet that Russia has amassed to move its oil and refined products in the face of the price cap that Western allies have imposed on Russian crude and petroleum products.
The price cap mechanism set by the G7 and the EU says that Russian crude shipments to third countries can use Western insurance and financing if cargoes are sold at or below the $60-a-barrel ceiling. The measure took effect at the end of 2022 when the EU imposed an embargo on seaborne imports of Russian crude oil.
This spring and summer, Russia was found to be using a growing number of oil tankers sanctioned by the West to export its oil, in a move suggesting that Moscow became more successful and bolder in defying U.S. and EU restrictions.
Also this year, the UK and the EU began to sanction dozens of specific oil tankers found to have shipped Russian oil.
This week, the UK sanctioned 20 shadow fleet ships carrying illicit Russian oil, including Ocean Faye, Andaman Skies, and Mianzimu, which have each carried more than four million barrels of Russian oil in 2024.
These add to the 73 tankers that Britain has already targeted with sanctions so far this year.
This time the UK went further by slapping sanctions on trading firms 2Rivers DMCC and 2Rivers PTE LTD, “key lynchpins in enabling the trading of Putin’s precious oil”.
“These new measures will further drain Putin’s war chest, by clamping down on the oil revenues he so desperately needs to fuel his illegal war and put those who enable Russia’s oil exports on notice,” as the UK government said.
The UK’s latest sanctions came a day after the EU on Monday adopted the 15th package of sanctions against Russia, which targets 52 new vessels from Russia’s shadow fleet, increasing the total number of such listings to 79. These non-EU vessels are subject to a port access ban and a ban on provision of services.
The UK and EU moves also add to the coordinated action by Denmark, Sweden, Poland, Finland, Estonia, and the UK, which will begin regularly inspecting the insurance certificates of oil tankers used by Russia in the Baltic and North Seas. Inspections will be carried out along the route used by the shadow fleet through the English Channel, the Danish Straits, and the Gulf of Finland.
“Those shadow fleet vessels and their enablers should be in no doubt: we are determined to hold them to account – including through sanctions-related action – for the risks they pose and the support they are providing to Russia’s war against Ukraine,” the countries said in a joint statement.
“Oil tankers used by Russia present considerable environmental risks. The accident involving two tankers in the Black Sea this weekend is a stark example of what can happen when these risks materialise,” said Finland’s Foreign Minister Elina Valtonen.
Russia’s oil exports and revenues have dropped in recent weeks, but this is not due to the sanctions alone. Russia has been under increased pressure to fall in line with its OPEC+ quota as part of the group that looks to support oil prices. Maintenance of port infrastructure also reduces shipments in some weeks.
The most recent decline in Russia’s oil revenues – a 21% slump – in November from a year earlier was the result of lower international oil prices.
By Tsvetana Paraskova for Oilprice.com
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