U.S. Imposes New Sanctions for Breaching Russian Oil Price Cap

Written by Henrik Rothen

Jan.18 - 2024 6:20 PM CET

Photo: Shutterstock.com
Photo: Shutterstock.com
U.S. Imposes New Sanctions for Breaching Russian Oil Price Cap

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The U.S. Treasury Department's Office of Foreign Assets Control (OFAC) has taken decisive action against Hennesea Holdings Limited, a shipping company, for violating the $60 per barrel price cap on Russian crude oil.

This recent sanction reflects Washington's continued efforts to enforce the price cap, a measure strongly supported by the Group of Seven (G7) nations.

Enforcing the Price Cap Against Violators

The decision to sanction Hennesea Holdings Limited comes as part of a broader initiative to penalize entities circumventing the agreed-upon price limit. The G7 countries have been adamant about enforcing this cap, especially after Russia successfully exported its crude above the $60 threshold using a "ghost fleet" of mostly uninsured tankers.

Identifying the Offender

OFAC identified Hennesea, based in the United Arab Emirates, as the ultimate owner of 18 vessels involved in transporting Russian crude above the stipulated price cap. This includes the vessel HS Atlantica. Hennesea, established in late 2022, had acquired older tankers for shipping Russian crude oil and petroleum products shortly before the cap was implemented in December of the same year. The Treasury's statement highlighted the company's frequent port calls in Russia.

Consequences of the Sanction

The sanctions imposed on Hennesea entail freezing of the company’s properties and prohibiting any transactions on U.S. soil. Deputy Treasury Secretary Wally Adeyemo emphasized the seriousness of these actions, stating, "Today's actions once again demonstrate that anyone who violates the price cap will face the consequences. No one should doubt our coalition's commitment to stopping those who help the Kremlin."

Previous and Ongoing Sanctions

This is not the first instance of the U.S. sanctioning entities for breaching the price cap. In October 2023, two companies and their tankers were targeted for similar violations, with several other entities and vessels facing sanctions since then.

The European Union has also joined in exerting pressure, with its 12th sanctions package including measures to tighten controls over the price cap. This collective effort underscores the international community's resolve to uphold economic measures against Russia amidst ongoing geopolitical tensions.