The US Department of the Treasury’s Office of Foreign Assets Control (OFAC) has announced its second price cap enforcement action of 2024, targeting four entities and designating one vessel as blocked property due to involvement in a scheme violating the price cap on Russian oil late last year. Additionally, OFAC is tightening its grip on Russian revenues by banning the importation of certain Russian diamonds, aligning with G7 commitments.
Under Secretary for Terrorism and Financial Intelligence, Brian E. Nelson, emphasized the impact of the coalition’s price cap and sanctions, stating, “Russia’s own top energy official admits…the coalition’s price cap and our sanctions have led to widening discounts on Russian oil, limiting the revenue the Kremlin relies on for its illegal war.” Nelson warned that today’s actions serve as a continued deterrent against price cap violations and fulfill G7 leaders’ commitments to curb Russian income from the diamond trade.
The international Price Cap Coalition, including the G7, the EU, and Australia, has agreed to prohibit the import of Russian oil unless it is sold at or below established price caps or authorized by a license. This initiative aims to reduce the Russian Federation’s oil revenues, which surged after its aggression against Ukraine spiked global energy prices, while ensuring a steady oil supply to the global market.
In efforts to bolster compliance and enforcement, OFAC, in coordination with the Price Cap Coalition, has updated guidance and published advisories outlining evasion methods and promoting industry best practices. The latest update strengthens attestation and recordkeeping for service providers to minimize Russian oil purchases above the cap.
The enforcement action specifically targets the United Arab Emirates-based entities Zeenit Supply and Trading DMCC and Talassa Shipping DMCC, along with NS Leader Shipping Incorporated and Oil Tankers SCF Mgmt FZCO, for their roles in trading Russian oil above the $60 per barrel price cap. The vessel NS Leader was identified in a November 2023 transaction involving overpriced Russian Urals crude oil, implicating these entities in the violation.
Furthermore, OFAC has issued new determinations to prohibit the importation of Russian-mined diamonds and certain diamond products, effective from March 2024. These measures are part of a phased approach to fulfill G7 commitments made in December 2023 to limit Russian revenue streams further.
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