The United States and the United Kingdom have unveiled stringent sanctions against Russia's oil industry, targeting over 200 entities and individuals. This move aims to curb Russia's energy exports and deplete the revenue fueling its war efforts in Ukraine. The Biden administration has implemented some of its toughest measures, and the UK has joined in by directly sanctioning major Russian energy companies. These actions are part of a broader strategy to severely limit who can legally purchase Russian energy, with the goal of undermining Moscow's "shadow fleet" of vessels that transport oil globally.
The US Treasury announced that these sanctions will be codified into law, necessitating the incoming Trump administration to involve Congress should it seek to lift them. US Treasury Secretary Janet Yellen stated that the sanctions would "severely limit" Russia's energy revenue, a sentiment echoed by President Joe Biden, who remarked that Russian leader Vladimir Putin was in "tough shape." The measures aim to drain Russia's war chest and hamper its military operations, with Ukraine's President Volodymyr Zelensky expressing gratitude for the bipartisan support from the United States.
"Taking on Russian oil companies will drain Russia's war chest – and every ruble we take from Putin's hands helps save Ukrainian lives," – Foreign Secretary David Lammy
The sanctions target not only oil traders and officials but also insurance companies and hundreds of oil tankers. The UK specifically targets Gazprom Neft and Surgutneftegas, reinforcing its commitment to supporting Ukraine. Foreign Secretary David Lammy described the sanctions as a "significant step" in these efforts. Meanwhile, John Herbst, former US ambassador to Ukraine, emphasized that while these steps are excellent, their effective implementation will be crucial.
"ratcheting up the sanctions risk associated with Russia's oil trade, including shipping and financial facilitation in support of Russia's oil exports." – US Treasury Secretary Janet Yellen
The US is moving to severely restrict the legality of purchasing Russian energy, with Daniel Fried noting that US oil production and exports are at record levels, potentially mitigating the price impact of removing Russian oil from the market.
"it's really important that he not have any breathing room to continue to do the god-awful things he continues to do." – President Joe Biden
"US oil production (and exports) are at record levels and rising, and therefore the price impact of taking Russian oil off the market, the objective of today's sanctions, will be attenuated," – Daniel Fried
Olga Khakova from the Atlantic Council's Global Energy Centre pointed out that the effectiveness of previous price caps on oil had been diluted by attempts to maintain Russian oil volumes in the market. However, the current sanctions are expected to deliver a significant blow to Russia's oil sector.
"The US government has gone after the Russian oil sector in a big way, intending to deal what may turn out to be a body blow," – Daniel Fried