The Biden administration is set to announce new measures to raise the cost of Russia’s attempts to skirt a limit set on the price for its oil, a senior administration official told CNN, as the West aims to enforce more strictly a price cap first introduced nearly a year ago.
The new sanctions, part of a series of actions set to be announced Thursday, would primarily target the illicit fleet of ships the Kremlin has built up in the last year for the purpose of transporting its oil and oil products and selling them above price limits put in place by the West.
The senior administration official told CNN the policy process has been underway for several months.
In December 2022, the United States, G7 allies and Australia banned the purchase of Russian oil above the price of $60 per barrel if it was shipped, insured or financed by the West. The policy’s goal was to cut off revenues to Russia – used to fund the country’s invasion of Ukraine – while still keeping enough oil on the market to limit disruptions for global consumers.
But the Kremlin began establishing a workaround by sourcing other means to ship and insure energy and sell it above the cap. In early October, Treasury Secretary Janet Yellen told reporters that recent market prices for Russian oil suggested there had been a “reduction in effectiveness” of the price cap.
Yellen is expected to discuss the price cap and its enforcement with her G7 counterparts in Marrakech this week, where the International Monetary Fund and World Bank are holding their annual meetings.
Speaking from Marrakech, Yellen said the policy had “significantly reduced Russian revenue,” while also acknowledging Russia was spending “huge amounts on its alternative ecosystem” to export energy products.