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US sanctions UAE entities for allegedly violating Russian oil price cap

The US Treasury Department also moved to crack down on entities buying diamonds from Russia, a key revenue stream for Moscow amid its war against Ukraine.
An oil tanker waits near the Marathon Anacortes Refinery, operated by Marathon Petroleum, in Anacortes, Washington, March 8, 2022.

The United States has sanctioned three entities in the United Arab Emirates and one Liberian-registered crude tanker for allegedly violating a price cap on Russian oil imposed by the G7, European Union and Australia in response to Russia's invasion of Ukraine in 2022.

The cap, imposed in December 2022, limited Russian oil imports in excess of $60 per barrel. The intention was to maintain a reliable supply of crude oil and petroleum products to the global market while reducing Russian oil revenues after the attack on Ukraine inflated global energy prices.

A statement by the US Treasury late on Thursday said that the four sanctioned entities had been “involved in a price violation scheme in late 2023.” 

The sanctioned UAE entities were Zeenit Supply and Trading DMCC, Talassa Shipping DMCC, and Oil Tankers SCF. NS Leader Shipping, the owner of the Liberian-registered vessel, was also designated for sanctioning.

Treasury claims that Zeenit had sold Russian crude oil in November 2023 priced above $80 per barrel and delivered it using the vessel NS Leader. The ship made five port calls in Russia last year, the statement said, adding that the Russian government is “the ultimate owner” of the NS Leader.

Zeenit and Talassa together engaged in multiple shippings of crude oil of Russian Federation origin and using vessels loaded in Russian ports in 2023, Treasury said. The two entities share a business manager and were founded roughly within a week of one another in July 2022. 

Oil Tankers SCF has managed the NS Leader since September 2023, including during the November 2023 voyage when the NS Leader carried above-cap crude oil of Russian origin, Treasury alleged.

The EU, UK and US-sanctioned SUN Ship Management D Ltd had managed the NS Leader from April 2022 until September 2023, Treasury remarked.

The statement said Oil Tankers SCF manages oil tankers beneficially owned by the Russian Federation government through Sovcomflot, a Western-sanctioned Russian-state-owned shipping company.

Oil Tankers SCF also manages the US-sanctioned vessels Ligovsky Prospect, Kazan, NS Century, NS Champion, and Viktor Bakaev, all of which have been involved in the export of crude oil of Russian Federation origin priced above $60 per barrel after the price cap took effect, Treasury claimed.

It is the second price cap enforcement action taken by the G7 in 2024, following one last month against Hennesea Holdings Limited, a UAE shipping company.

The United Kingdom has also sanctioned Oil Tankers SCF.  

Diamonds aren’t forever

The Treasury Department also said it had taken steps to block the import of certain categories of diamonds mined in Russia, a key source of revenue for Moscow that Washington wants to stop in light of the 2022 invasion of Ukraine.

They include a prohibition on the import of non-industrial diamonds mined or extracted in Russia, even if substantially transformed in a third country. The measure takes effect as of March for certain categories of diamonds and will be expanded in September to include additional categories.

Treasury is also banning imports of diamond jewelry and unsorted diamonds of Russian origin, effective from March. 

Brian Nelson, US under secretary of the Treasury for terrorism and financial intelligence, said in a statement, “Russia’s own top energy official admits that 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.”

He added that the sanctions serve “as a continued warning” that the United States will respond to violations of the price cap.