United States sanctions a UAE shipping company for breaching the price cap on Russian oil

On January 18, the U.S. Treasury Department took decisive action by imposing fresh sanctions with a focus on Russian-related entities. The target this time was the United Arab Emirates-based Hennesea Shipping Company and a fleet of 18 vessels allegedly involved in shipping Russian seaborne oil above the established $60-per-barrel cap set by a U.S.-led international coalition.

In a press release, the Treasury Department, through its Office of Foreign Assets Control (OFAC), identified Hennesea Shipping Company as the "ultimate owner" of the 18 tankers now under scrutiny. The OFAC had previously singled out one specific vessel, the HS Atlantica, for transporting Russian-origin crude oil above the $60 cap while utilizing services from a U.S.-based maritime provider.

The Group of Seven (G7) industrialized nations had initially imposed the price cap on seaborne Russian crude oil in December 2022, responding to Russia's invasion of Ukraine. This strategic measure aims to curtail the financial resources available to Russia for its military efforts while maintaining stability in the global oil market.

Effectively, the price cap prohibits various services, including shipping, insurance, and finance, from handling Russian crude oil shipments exceeding the $60 limit. With key shipping and insurance firms predominantly located in G7 countries, the coalition wields significant influence in enforcing the price cap, making it challenging for Moscow to sell its oil at higher prices.

Highlighting the timeline leading to the sanctions, the Treasury Department noted that Hennesea acquired older tankers specifically designed for shipping Russian crude oil and petroleum products just before the price cap went into effect. The department also emphasized that vessels "ultimately owned" by Hennesea had consistently made port calls at Russian ports.

In response to these activities, the Treasury Department's sanctions against Hennesea include measures to block the company from engaging in dollar-based transactions, effectively placing it on the Specially Designated Nationals list. Deputy Treasury Secretary Wally Adeyemo underscored the coalition's unwavering commitment to enforcing the price cap, stating, "Today’s actions once again demonstrate that anyone who violates the price cap will face the consequences. No one should doubt our coalition's commitment to stopping those who help the Kremlin."

The Price Cap Coalition, inclusive of the European Union and Australia, recently announced modifications to its compliance regime. According to the Treasury Department, these changes are designed to make it more challenging for Russian exporters to circumvent the price cap. The coalition intends to require Western maritime service providers to obtain "attestations" from other businesses, confirming that the Russian oil was sold within the established cap, each time they lift or load the oil.