WASHINGTON — Today, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) is imposing sanctions on two entities and identifying as blocked property two vessels that used Price Cap Coalition service providers while carrying Russian crude oil above the Coalition-agreed price cap. This action underscores the Treasury Department’s commitment with its international partners to responsibly reducing Russian government oil profits and constraining the Russian war machine. Treasury and the coalition will remain vigilant in monitoring the compliance of shipping companies and vessels participating in the Russian oil trade while using the services of Price Cap Coalition service providers.
In addition to today’s sanctions actions, the Price Cap Coalition has also published a Coalition Advisory for the Maritime Oil Industry and Related Sectors. The Advisory, which is directed at both government and private sector actors involved in the maritime trade of crude oil and refined petroleum products, provides recommendations concerning specific best practices and reflects our commitment to promoting responsible practices in the industry, preventing and disrupting sanctioned trade, and enhancing compliance with the price cap.
“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 PRICE CAP
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.
All Coalition members are dedicated to enforcing the price cap, as noted in the Coalition statement regarding this U.S. action, and to promoting responsible practices in the maritime oil industry, as outlined in the Coalition Advisory for the Maritime Oil Industry and Related Sectors.
VESSELS CARRYING RUSSIAN OIL PRICED ABOVE THE PRICE CAP
Today, OFAC demonstrates the importance of compliance with the price cap policy and continues its efforts to constrain Russia’s ability to prosecute its war against Ukraine.
The crude oil price cap took effect in December 2022 with a cap on Russian crude oil at $60 per barrel. The SCF Primorye carried Novy Port crude oil priced above $75 per barrel from a port in the Russian Federation after the crude oil price cap took effect. United Arab Emirates-based Lumber Marine SA is the registered owner of the SCF Primorye.
As described in OFAC’s April 17, 2023 Alert, OFAC is also aware of reports that Eastern Siberia Pacific Oil (ESPO) and other crudes exported via Pacific ports in the Russian Federation, such as Kozmino, may be trading above the price cap and may be using covered services provided by U.S. persons. OFAC continues to monitor this activity closely. The YasaGolden Bosphorus carried ESPO crude oil priced above $80 per barrel after the crude oil price cap took effect. Turkiye-based Ice Pearl Navigation Corp is the registered owner of the Yasa Golden Bosphorus.
Both the SCF Primorye (IMO 9421960) and the Yasa Golden Bosphorus (IMO 9334038), which conducted port calls in the Russian Federation, used U.S.-based service providers while transporting the Russian origin oil.
Lumber Marine SA and Ice Pearl Navigation Corp were both designated pursuant to Executive Order 14024 for operating or having operated in the marine sector of the Russian Federation economy. OFAC also identified the SCF Primorye and the Yasa Golden Bosphorus as property in which Lumber Marine SA and Ice Pearl Navigation Corp, respectively, have an interest.
As a result of today’s action, all property and interests in property of the persons above that are in the United States or in the possession or control of U.S. persons are blocked and must be reported to OFAC. In addition, any entities that are owned, directly or indirectly, 50 percent or more by one or more blocked persons are also blocked. All transactions by U.S. persons or within (or transiting) the United States that involve any property or interests in property of designated or blocked persons are prohibited unless authorized by a general or specific license issued by OFAC, or exempt. These prohibitions include the making of any contribution or provision of funds, goods, or services by, to, or for the benefit of any blocked person and the receipt of any contribution or provision of funds, goods, or services from any such person.
The power and integrity of OFAC sanctions derive not only from OFAC’s ability to designate and add persons to the SDN List, but also from its willingness to remove persons from the SDN List consistent with the law. The ultimate goal of sanctions is not to punish, but to bring about a positive change in behavior. For information concerning the process for seeking removal from an OFAC list, including the SDN List, please refer to OFAC’s Frequently Asked Question 897. For detailed information on the process to submit a request for removal from an OFAC sanctions list, please click here.