Reported by Alan Rappeport

On Thursday morning, the Group of 7 pledged to be tougher in enforcing measures it had taken to pressure Russia’s economy, saying it was “committed to countering any attempts to evade and undermine our sanction measures.”

As part of that toughened approach, the United States imposed sanctions on two shipping companies on Thursday for violating the oil price cap that the Group of 7 nations enacted to starve Russia of energy export revenue. They were the first such penalties leveled amid growing concerns that evasion and loopholes had diminished the policy.

The sanctions were announced at a time of renewed anxiety about global energy prices following the attack by Hamas on Israel over the weekend that threatens to become a regional conflict. The price cap was put in place late last year to prevent Russia from benefiting from soaring energy prices by limiting its ability to sell oil using Western insurance and financing.

The cap was set so that Russian oil could not be sold for more than $60 per barrel if using those services. It was designed to ensure that Russian oil continued to flow but at a deep discount, to starve Moscow of revenue needed to fund its war.

The Treasury Department imposed sanctions on Lumber Marine, a United Arab Emirates shipping company, for transporting crude oil priced above $75 per barrel from a Russian port after the cap was put in place. It also imposed sanctions on Ice Pearl Navigation Corporation, a Turkish shipping company, for transporting Russian crude oil priced above $80 per barrel.

Being added to the U.S. sanctions list could interfere with both companies’ ability to participate in the global oil trade.

The Group of 7 has been closely watching how the oil markets have responded to the price cap. The group has largely considered it successful because oil prices have not surged and, officials believe, Russian oil profits have been eroded because the Kremlin has had to invest in a “shadow” fleet of ships and alternative financial service providers.

Read full report: https://www.nytimes.com/2023/10/12/business/us-sanctions-russia-oil.html