Three Emirati shipping firms will see a freeze on their US-based assets after violating G7 price cap: The US Treasury Department’s Office of Foreign Assets Control (OFAC) has imposed penalties on UAE-based Kazan Shipping, Progress Shipping, and Gallion Navigation for operating tankers which engaged in trade violating the USD 60 per barrel price cap on Russian crude while employing US-based services, according to a statement.

The details: Property owned by the firms in the US or controlled by US-based firms have been frozen and a ban has been issued on US firms engaging with the companies, the statement explained.

REMEMBER- A price cap of USD 60 per barrel on shipments of Russian oil mandated by G7 countries and Australia came into effect in February of this year. The regulation seeks to curb revenues that Moscow can divert to its war in Ukraine while also ensuring relative stability in global oil supplies.

OFAC is not kidding around: “Shipping companies and vessels participating in the Russian oil trade while using Price Cap Coalition service providers should fully understand that we will hold them accountable for compliance,” Deputy Secretary of the Treasury Wally Adeyemo said in the statement.

What’s next for the penalized ships? The ships are making their way to India, which is considering whether or not to let them dock at the port, Marine Insight reports

This is the second time the US has imposed price cap-related sanctions in as many months as it looks to double down on loopholes:Early October saw OFAC slap sanctions on UAE-based Lumber Marine and Turkey-based Ice Pearl Navigation in the first instance of such penalties. Although the price cap has been in place for almost a year, Russian crude had been trading below the USD 60 per barrel cap until as recently as July, S&P Global reported.

There’s doubt over the sanctions’ effectiveness: The sanctions are not expected to be decisive in limiting trade violating the price cap as the sanctioned entities are Russian owned companies that are “expendable” and can easily be switched out with new ones, Director of Geopolitical Risk Service at Rapidan Energy Group told S&P Global.

Russia’s Urals fell below the price cap following the sanctions:Russian Urals oil fell below the Western USD 60 cap amid increased freight rates caused by new US sanctions on shipowners and a decline in global oil prices, Reuters reports. Freight rates for Urals oil shipments from Russia's Baltic ports of Primorsk and Ust-Luga to India rose to USD 9.2-9.5 mn per tanker per voyage on Friday, up from USD 8 mn last week.

REMEMBER-Western sanctions on Russian crude following Russia’s invasion of Ukraine has redrawn energy trade routes, with the UAE’s location and well-developed shipping industry seeing the country emerge as a hub for the transhipment of Asia-bound Russian oil.

Tags: