The Treasury Department announced new enforcement measures on Thursday aimed at tightening the G7 price cap on Russian oil amid reports that Moscow’s flagship Urals grade crude is being sold at prices far higher than the $60-per-barrel cap set by Western leaders.
Treasury’s Office of Foreign Assets Control, or OFAC, also announced new sanctions against two entities that it said continue to transport Russian oil at prices above the capped price while using Western shipping services, a direct violation of the terms of the price cap coalition.
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“Today’s action demonstrates our continued commitment to reduce Russia’s resources for its war against Ukraine and to enforce the price cap,” Deputy Treasury Secretary Wally Adeyemo said in a statement.
He said that the Treasury is still committed to the goals of the price cap, which were to limit Russia's funding for the war in Ukraine and to ensure that Russian supplies remain on the market so that prices don't soar.
Also on Thursday, the G-7-led coalition published a new document, the “Coalition Advisory for the Maritime Oil Industry and Related Sectors,” directed at both public and private sector entities involved in the maritime transport of crude oil and refined petroleum products.
The publication provides specific recommendations and best practices to help them comply with the terms of the cap, according to Treasury officials.
The news comes as Treasury Secretary Janet Yellen prepares to travel to Luxembourg for the Eurogroup’s finance ministers meeting, during which the price cap enforcement is expected to be a key topic of discussion.
Earlier this week, she said in an interview that the U.S. is “very likely” to take additional steps to enforce the $60-per-barrel limit on Russian crude exports set by the G7-led price cap coalition last December, which was separately confirmed to the Washington Examiner by a senior Treasury spokesperson.
Russia’s exports of its flagship Urals-grade crude fetched average prices of $85 per barrel in September, roughly $25 higher than the capped price agreed to by members of the price cap coalition.
Sizable volumes of Russian crude are also still being transported on Western ships. In the seven-day period ending Oct. 1, 37% of Russia’s fossil fuel exports were sent on ships owned or insured by countries in the G-7 or Europe — all of which are members of the price cap coalition, according to data compiled by the Center for Research on Energy and Clean Air.
Yellen recently acknowledged for the first time that the Russian price cap may not be as effective as leaders had intended, telling reporters that the prices, coupled with the Kremlin’s efforts to build out its “shadow fleet” and otherwise evade the cap, have complicated enforcement efforts for the G7-led price cap coalition.
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“Russia has spent a great deal of money and time and effort to provide services for the export of its oil,” Yellen told reporters. “They have added to their shadow fleet, provided more insurance, and that kind of trade is not prohibited by the price cap.”