US Treasury Targets Russian Entities Involved In Price Cap Violations

Along with its Western Allies, the U.S. continues to target vessels that violate Russia’s one-year-old oil price cap and other initiatives aimed at generating foreign exchange for Russia. The U.S. Treasury announced its second action of 2024, seeking multiple UAE-based management entities related to this in addition to other tankers and a Liberian-registered tanker, which it claims is under Russian control. Concurrently, the United States initiated measures for carrying out G7 pledges to prohibit the importation of Russia’s diamonds.

As noted by Reuters, since the United States started enforcing the Price Cap in October 2023, roughly 27 vessels have been reported for transporting Russian oil over $60 while utilizing a Western marine service. In addition to prohibiting Americans from doing business with the tankers, the actions seem to be preventing other nations from engaging in business with the tankers out of worries for possible American retribution.

Under Secretary associated with the Treasury for Terrorism and Financial Intelligence stated that one of Russia’s top energy officials has acknowledged that the coalition’s price cap and the sanctions have contributed to the widening discount on the country’s oil, reducing the revenue Kremlin relies on for illegal wars. The statement reads that vessels that breached the price limit on Russia’s oil should be warned that the U.S. can and will execute violations of the price cap.

The tanker at the centre of the action is the 2007-built, 115,850 dwt vessel N.S. Leader registered in Liberia. The registered owners are N.S. Leader Shipping is based in Liberia. Still, the U.S. is stating vehemently that the final owner is the Government of the Russian Federation, as it centred on the tanker and an array of firms associated with the vessel. Besides stopping the tanker, they listed its registered owner, N.S. Leader Shipping.

According to U.S. information, the N.S. The leader reportedly made five port calls to Russian ports last year. In November last year, the U.S. asserted the tanker had delivered oil prices at more than $80 a barrel, over $20 above the $60 price cap levied in December 2022. They also report that UAE-based Zeenit Supply and Trading DMCC have sold Russian Urals crude oil that had been transported onboard the vessel.

Included in the recent action was Oil Tankers SCF Mgmt FZCO, based in the United Arab Emirates, which has been managing the N.S. Leader since September 2023, particularly during the journey in November 2023 where the N.S. Leader transported above-cap crude oil of Russian Federation origin. The business that oversaw the N.S. Leader from April 2022 to September 2023 is SUN Ship Management D Ltd., and the United States, the United Kingdom, and the European Union have also sanctioned it.

The United States says that while they monitored the vessel’s activities, two more UAE-based businesses surfaced. According to the U.S., these companies were founded in about seven days of each other in July 2022 and have the same business manager. Zeenit and Talassa Shipping DMCC, based in the United Arab Emirates, participated in the joint shipment of several Russian Federation-origin crude oil cargo, deploying vessels that arrived in Russian ports last year.

The U.S. Treasury’s Office of Foreign Assets Control published two new determinations prohibiting the importation of specific diamond categories mined in Russia. The OFAC first issued a declaration restricting the import of non-industrial diamonds extracted/mined in Russia, notwithstanding whether those have been transformed in any other third country. This will be effective from March 1 for specific diamond categories and expand on September 1 to include some additional categories. The OFAC also issued a prohibition on the import of diamond jewellery as well as unsorted diamonds of the Russian Federation origin or the ones that are exported from the Russian Federation. This will be effective starting March 1.

They observed that the prohibitions are meant to implement last year’s December G7 commitments to have phased restrictions on importing diamonds extracted/mined in Russia. The OFAC reports that it intends to issue public guidance about such determinations.

Reference: treasury.gov

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