On Thursday, the US Treasury Department imposed a set of new sanctions on ships and companies accused of using American service providers to ship Russian crude oil above the $60 price cap. The cap, imposed by the US and the Group of Seven (G7) nations in late 2022, was meant to deprive the Kremlin of funds for its war effort, but that strategy has failed.
Three firms based in the United Arab Emirates and three ships were blacklisted from transferring oil and other products with US service providers. Last month, the Treasury issued its first sanctions over violations of the Russian oil price cap and notified shipping management firms in more than 30 countries that Washington is seeking information regarding 100 vessels it believes are dodging sanctions.
“We are committed to maintaining market stability in spite of Russia’s war against Ukraine, while cutting into the profits the Kremlin is using to fund its illegal war and remaining unyielding in our pursuit of those facilitating evasion of the price cap,” boasted Wally Adeymo, the deputy secretary of the Treasury.
It’s been almost a year since the price cap was implemented and Moscow has seen an “almost complete export volume recovery” in oil, Chris Weafer, the chief executive officer of strategic consultants Marco-Advisory Ltd, told Newsweek.
He continued, highlighting that Russia shipped 3.5 million barrels of crude per day last month via tankers, along with 1.2 million barrels through the East Siberia pipeline. In August, Russia was selling oil at an average price of $74 per barrel. Weafer also notes Russia has seen further gains as a result of the Brent crude price increasing from $70 to $95 per barrel between July and September.
In response to the sanctions and the price cap, the Kremlin continued looking east and selling its oil to non-sanctioning countries. Last year, Moscow became the top crude supplier to India and China. Russia has also been using a “shadow fleet” of vessels to circumvent the Western economic penalties.
Weafer says Washington and the G7 expected to be dealing with the “old tanker market structure… [assuming Russia would be using a] few very big tanker operators with large fleets that would have been easy to monitor and enforce.”
However, he says, “what has emerged is a greatly dispersed fleet ownership with the flexibility to disappear and reappear with a new name faster than the G7/EU can catch them.”
At any rate, Washington and NATO’s proxy war with Russia in Ukraine has been a disaster. As EUROCOM chief General Christopher Cavoli explained to Congress earlier this year, Russia’s navy and air force have taken negligible losses and its ground forces are “bigger today” than when the war began. The Pentagon is depleting its own weapons stocks to support Kyiv’s failing war effort, while Russia’s capacity to produce armor and ammo has outstripped the entire NATO alliance.
Ukraine has lost 20% of its country, the Kremlin gained more territory than Kyiv this year, and Ukrainian forces are estimated to have suffered tens of thousands of casualties during recent months. Despite all this, the White House is still seeking roughly $60 billion from Congress to continue funding the war through next year’s presidential election.
In September Russia’s Finance Ministry published a document explaining that Moscow will ramp up defense spending by 68% to 10.8 trillion rubles ($111.15 billion) next year.
Connor Freeman is the assistant editor and a writer at the Libertarian Institute, primarily covering foreign policy. He is a co-host on the Conflicts of Interest podcast. His writing has been featured in media outlets such as Antiwar.com, Counterpunch, and the Ron Paul Institute for Peace and Prosperity. He has also appeared on Liberty Weekly, Around the Empire, and Parallax Views. You can follow him on Twitter @FreemansMind96.