The U.S. is seeking to slash Russia’s oil and gas revenue by 50% by 2030, a top administration official said Thursday, signaling that Washington views its current Russian sanctions and other punitive measures as lasting for years.
Geoffrey Pyatt, the assistant secretary of state for energy resources, told the Financial Times in an interview that the goal of the U.S. sanctions and other measures, such as the G7-led oil price cap on Russian crude oil and refined oil exports, must be in place as long as necessary to starve Russia of its primary resource.
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“This is something that we’re going to have to stick to for years to come, as long as Putin persists in this war,” Pyatt said. “We’re going to do everything we can to help make that true."
His remarks come as Russian oil and gas profits have continued to soar in recent months despite harsh sanctions imposed by the U.S. and EU and in defiance of the G7-backed Russian oil price cap.
According to the price cap scheme, any vessels that use Western service providers to ship Russian crude oil are required to sell it at or below the $60 price cap. (Refined petroleum products, such as gasoline and diesel, are capped at $100 per barrel.)
Russian oil and gas revenue jumped 28% in October compared to the same period last year, pushed higher by rising commodity prices and the Kremlin's pause in subsidizing gas refiners. Financial data for November have not yet been released.
And Russia's Urals-grade crude has continued to trade higher than the $60 per barrel price cap. In October, Urals exports were trading at $81.52 per barrel, according to data from the Russian Finance Ministry — the fourth straight month that profits exceeded the $60 per barrel mark.
Much of Russian oil is now believed to be shipped via its growing "shadow fleet," or the off-book vessels it uses to ship its oil to buyers above the $60 cap for crude exports and the $100 cap for certain refined products, such as diesel.
Treasury has stepped up its price cap enforcement efforts in recent months amid signs that Russia is skirting the cap and sending more oil via its shadow fleet.
Last month, Treasury sent notices to ship management companies seeking information on roughly 100 vessels that it believes are continuing to ship Russian crude above the $60 cap.
Treasury’s Office of Foreign Assets Control sent the notices to shippers in 30 countries as part of that effort— reflecting the magnitude of the problem and signaling that they plan to follow through with their pledge to crack down on shippers that violate the cap.
Pyatt echoed these concerns Thursday, saying the U.S. is currently looking for "ways to make that shadow fleet less effective."
“My colleagues at Treasury who lead on this are looking very hard at the question of how do we ensure the continued effectiveness of this policy,” he said.
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Asked Thursday whether the U.S. will support new EU efforts to demand more information from shippers and to conduct more due diligence on vessels, Pyatt said: "Watch this space."
“The goal of these sanctions is to change Russia’s behavior and to ensure that Putin is not in a position, whenever some kind of peace is achieved … to use three or four years to rearm and prepare himself and prepare his military for stage three of the Ukraine invasion,” he added.