US Sanctions Consideration on Russia’s ‘Shadow Fleet’
The Biden administration is contemplating imposing sanctions on Russia’s “shadow fleet” of oil tankers if President Vladimir Putin fails to agree to a ceasefire in Ukraine by August 8. This potential move would mark the first US sanctions targeting Moscow since Joe Biden took office in January.
The “shadow fleet” consists primarily of aging tankers with opaque ownership structures, which have been instrumental in Russia’s ability to bypass Western oil price caps and continue financing its war in Ukraine. These vessels operate by concealing ownership, avoiding Western maritime services, and transporting crude to buyers such as China and India at prices above the G7’s $60-a-barrel cap.
Sanctioning these vessels directly has proven effective in the past, with buyers unwilling to use blacklisted ships. The Biden administration previously sanctioned 213 tankers, while the EU has listed more than 400 vessels in recent months. Analysts note that targeting ships rather than their owners sharply reduced operational capacity. Prior to designation, 115 sanctioned crude carriers shipped an average of 48 million barrels of Russian oil per month, compared with just 13 million barrels after.
The Biden administration is considering several options to increase economic pressure on Russia, including stricter enforcement of existing sanctions, adopting the EU’s upcoming “dynamic” floating oil price cap, and secondary sanctions on foreign banks or refineries involved in Russian oil trade. A bipartisan bill from Senators Lindsey Graham and Richard Blumenthal proposing tariffs of up to 500% on buyers of Russian energy is also gaining support.
President Biden has become increasingly frustrated with Putin’s refusal to halt the war, and a recent call with Ukrainian President Volodymyr Zelensky discussed possible sanctions. The White House is expected to decide on possible measures once Steve Witkoff, Biden’s special envoy, returns from his visit to Moscow this week. If Witkoff returns empty-handed, Biden is likely to impose biting sanctions.
The potential impact of these sanctions would be significant, particularly for the oil industry. Buyers such as China and India may need to find alternative suppliers or face financial penalties. The EU has already listed over 400 vessels in recent months, and the US could follow suit, further reducing Russia’s ability to export oil.
Original Article: Trump weighs sanctions on Russia’s ‘shadow fleet’ if Putin refuses ceasefire, FT reports — Kyivindependent