European countries are escalating efforts to curb Russia’s oil revenues, which help finance its ongoing war in Ukraine. This week, the UK and the European Union unveiled new sanctions targeting Russia’s shadow fleet of tankers, which facilitate the country’s oil trade.
The UK took a more aggressive stance by sanctioning two trading firms, calling them “key lynchpins” in facilitating the trade of Russian oil. In addition, countries around the North Sea and the Baltic Sea, including the UK, are tightening checks on insurance certificates to intercept suspected shadow vessels. These actions aim to target the covert fleet that Russia has built to bypass Western sanctions and the price cap on its crude and petroleum exports.
The price cap, introduced by the G7 and the EU, allows Russian oil shipments to third countries to use Western insurance and financing only if the cargo is sold for $60 per barrel or less. This cap came into effect at the end of 2022, alongside an EU embargo on Russian crude imports via sea.
Despite the sanctions, Russia has increasingly used sanctioned tankers to export oil, signaling that Moscow is becoming more adept at circumventing US and EU restrictions. In response, the UK and EU have sanctioned numerous specific oil tankers found to be transporting Russian oil.
This week, the UK imposed sanctions on 20 additional ships involved in the illegal transport of Russian oil, including Ocean Faye, Andaman Skies, and Mianzimu. These ships have each carried over four million barrels of Russian oil in 2024. With these new sanctions, the UK has now targeted a total of 93 tankers this year.
The UK also sanctioned two trading firms, 2Rivers DMCC and 2Rivers PTE LTD, describing them as critical enablers of the oil trade supporting Russia’s war efforts. The UK government stated that these measures would “further drain Putin’s war chest” by reducing oil revenues that fuel Russia’s illegal war.
This move followed the EU’s adoption of its 15th sanctions package on Monday, which targets 52 new vessels from Russia’s shadow fleet. These non-EU vessels are now banned from accessing ports and receiving services. The EU’s actions bring the total number of shadow fleet vessels sanctioned to 79.
In addition to these sanctions, Denmark, Sweden, Poland, Finland, Estonia, and the UK are coordinating efforts to inspect the insurance certificates of Russian oil tankers in the Baltic and North Seas. Inspections will focus on the route taken by the shadow fleet through the English Channel, the Danish Straits, and the Gulf of Finland. These countries have pledged to hold accountable those who support Russia’s oil exports, including through further sanctions.
The environmental risks posed by these tankers have also raised concerns. Finland’s Foreign Minister, Elina Valtonen, highlighted the dangers, citing a recent accident involving two tankers in the Black Sea as a warning of the potential consequences.
While Russia’s oil exports and revenues have recently decreased, this decline is not solely attributed to sanctions. Russia has faced increasing pressure to comply with its OPEC+ production quotas, and maintenance issues at port facilities have also impacted shipments. The most significant drop in revenue was a 21% decrease in November compared to the previous year, primarily driven by lower international oil prices.
Related Topics:
- Gold Price Falls, While WTI Crude and Natural Gas Prices Rise
- Oil Price Increase of 80¢/L Starting December 17
- Oil Prices Stay Under Pressure Despite Geopolitical Risks