US tightens oil ceiling: independent tankers arrested

Washington has begun a new stage of restrictions on the export of Russian raw materials

A senior US Treasury official, Eric Van Nostrand, announced the start of the White House’s work on the second stage of introducing a “ceiling” on Russian oil prices. Now Washington intends to strengthen sanctions against everyone who circumvents the imposed restrictions, including against carriers of “black gold” not directly associated with our country. To confirm the seriousness of their intentions, the Americans have already detained Arab and Turkish tankers transporting our raw materials at prices above the established limit.

Back in the summer, Washington argued that the introduction of sanctions for the transportation of Russian oil at prices above the “ceiling” of $60 per barrel would be relatively mild: the White House promised that it would not go beyond briefings and “expanding other contacts” with international traders, insurers and tanker owners will come in. Now the United States is trying to convince market participants that they should prepare for the worst: with those who violate the established requirements, the conversation will be short – “complete blocking of property,” that is, the seizure of the vehicle and transported raw materials.

Proof of such quick reprisal is the detention of the Turkish tanker Yasa Golden Bosphorus and the tanker SCF Primorye, owned by a company from the UAE. The first of them transported raw materials costing $80, and the second – $75 per “barrel.” The Americans are confident that this oil is of Russian origin. Appropriate sanctions have been introduced against shipowners. In addition to the fact that their property risks going under the hammer, other ships of the companies at fault may be prohibited from entering Western ports.

Another task that the Americans are going to tackle as part of the second stage of anti-Russian oil sanctions is an attempt to maximize the costs of sea transportation of raw materials from our country. The White House intends to achieve this goal by limiting the number of new and reducing the number of existing vessels in Russia’s “shadow fleet.”

Until now, oil restrictions, including the price ceiling of $60, have not greatly burdened domestic exporters. Already in August, two out of three “barrels” of Urals were supplied abroad at prices much higher than the level established by the G7 embargo, and the cost of many shipments was close to Brent quotes. The technology for bypassing price limits was (and still is) quite simple. On the high seas, our raw materials are transferred onto a tanker chartered by the buyer or intermediary and mixed with fuel produced elsewhere in the world. In this case, it is almost impossible to prove that hydrocarbons are of “toxic” Russian origin.

According to experts, there is no reason to believe that such “free” trade will remain a thing of the past. As long as only certain small players are subject to Washington’s restrictions, Russian export flows will not undergo a dramatic reduction. “The question is whether the United States will decide to take demonstrative actions, for example, continuous arrests of ships or complicating and delaying the inspection of tankers with the participation of warships,” notes Dmitry Alexandrov, head of the analytical research department of IVA Partners. “However, such excesses can seriously complicate the work of all market participants. The political effect in this case will not be in favor of the United States. Therefore, in essence, on Washington’s part, it would be an all-in move.”

Moreover, European support for the anti-Russian “ceiling” is gradually weakening. EU countries have not even fulfilled their commitment to review the price ceiling every two months.

“The US Treasury Department’s statements about expanding oil sanctions against Russia, as well as against companies helping with the transportation of raw materials, look like the beginning of large-scale economic action, and not just a formal attempt to intimidate the market. However, the final result will depend on the reaction of international markets and individual Western countries,” says Alexander Shneiderman, head of the sales and customer support department at Alfa-Forex. — If other states support tightening sanctions, then new restrictions on oil exports will be painful for the Russian economy. We risk no longer seeing those pleasing prices for domestic export raw materials. However, Russia will certainly try to find other ways to circumvent the restrictions and, most likely, such attempts will be successful.”