US imposes sweeping sanctions against Russian oil industry

The US government imposed some of the harshest sanctions on the Russian oil industry on Friday, January 10, banning over 200 companies and individuals for violating previous sanctions. It has also identified 183 vessels as “blocked property”.

“This wide-ranging, robust action will further constrain revenues from Russia's energy resources and degrade Putin’s ability to fund his illegal war against Ukraine,” US Secretary of State, Anthony Blinken said.

The sanctions extended to Russian oil producers, tankers, intermediaries, traders, and ports, to hit “every stage of the Russian oil production and distribution chain.”

The US Department of the Treasury is concurrently sanctioning more than 150 entities and individuals, including two of Russia’s largest oil producers Gazprom Neft and Surgutneftegas, Russian insurance companies, and shadow fleet vessels.

UK follows suit

In a first since the Ukraine-Russia war, the UK joined the US and directly imposed sanctions on Gazprom Neft and Surgutneftegas, which produce over one million barrels of oil per day. They also generate approximately $23 billion per year for Russia.

Russia’s ghost fleet

Since the beginning of the Russia-Ukraine war, Moscow had been using “ghost fleets” as a way around the oil embargo imposed on it by the US and other NATO nations.

Ghost fleets are fleets of ships that operate clandestinely, have opaque ownership or are without proper insurance.

To circumvent the sanctions, Russia has had to reduce its reliance on Western maritime services by buying tankers and providing its own insurance.

None of the ships in its ghost fleet have proper P&I insurance, which provides shipowners and operators with financial protection in case of a loss or incident.

Also called “dark fleets,” these are used by Iran and Venezuela as a way around US sanctions.