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US sanctions shipping companies from Turkey, UAE for violating price cap on Russian oil

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The US Department of Treasury has imposed sanctions on two shipping companies from Turkey and the United Arab Emirates for carrying Russian oil in violation of a multinational price cap.

The crude oil price cap took effect in December 2022 with a cap on Russian crude oil at $60 per barrel. The cap was designed to deprive the Kremlin of revenue to fund its war in Ukraine, forcing the Russian government either to sell its oil at a discount or divert money for a costly alternative shipping network.

The US Department of the Treasury’s Office of Foreign Assets Control (OFAC) said in a statement on Thursday that Turkey-based Ice Pearl Navigation Corp, whose registered owner is the Yasa Golden Bosphorus, carried oil priced above $80 a barrel from a Russian port, while the UAE-based Lumber Marine carried oil priced above $75 a barrel from Russia.

Both companies relied on US service providers. As a result of the sanctions, the Biden administration is blocking the companies’ ability to conduct business or access any property or financial interests in the US.

It was the first time that the US government has imposed sanctions on shipping companies for breaching the price cap on Russian oil.

“Today’s action demonstrates our continued commitment to reduce Russia’s resources for its war against Ukraine and to enforce the price cap,” said Deputy Secretary of the Treasury Wally Adeyemo.

“We remain committed to implementing a price cap policy that has two goals: reducing the oil profits upon which Russia relies to wage its unjust war against Ukraine and keeping global energy markets stable and well-supplied despite turbulence caused by Russia’s unprovoked invasion of Ukraine. We will continue to take actions to achieve these two goals.”

The United States is part of an international coalition — the Price Cap Coalition — including the G7, the European Union and Australia, that have agreed to prohibit the import of crude oil and petroleum products of Russian Federation origin. These countries, home to many best-in-class financial and professional services, have also agreed to restrict a broad range of services related to the maritime transport of crude oil and petroleum products of Russian Federation origin — unless that oil is bought and sold at or below the specific price caps established by the coalition or is authorized by a license. This policy is known as the “price cap.” The price cap is intended to maintain a reliable supply of crude oil and petroleum products to the global market while reducing the profits the Russian Federation earns from oil after its own war of choice against Ukraine inflated global energy prices.

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