Washington and London announce new sanctions against Russian oil and gas

The American and British governments announced Friday new coordinated sanctions against the Russian energy sector, in particular against Gazprom Neft, in order to undermine “the Kremlin’s largest source of financing” for the war effort in Ukraine.

A few days before the inauguration on January 20 of US President-elect Donald Trump, the Treasury Department detailed a series of sanctions targeting, among others, two of the main Russian companies in the sector, Gazprom Neft and Surgutneftegaz.

London also sanctioned these two companies, which alone produce more than a million barrels of oil per day, worth about US$23 billion per year at current prices.

A decision immediately denounced as unjustified and illegitimate by Gazprom Neft, a subsidiary of the large state group Gazprom, cited by Russian press agencies.

Hit hard

Daleep Singh, White House deputy national security adviser for international economics, said the sanctions were the largest ever imposed by the United States to the Russian energy sector.

These sanctions will hit hard all key links in the Russian oil production and distribution chainhe added.

These sanctions could result in an increase in gasoline pricesconceded US President Joe Biden during a press conference at the White House, between 3 and 4 cents per gallon.

But it will have a much more profound impact on Russia’s ability to continue to act as it does in its conduct of the war.he insisted.

According to him, his Russian counterpart Vladimir Putin is bad postureand he is really important not to give him any respite.

The British Foreign Office also assured that oil revenues are vital to Russia’s war economy, accounting for around a quarter of the entire Russian budget in 2023.

Going after the oil companies will deplete Russia’s war chest, and every ruble we take out of Putin’s hands will help save Ukrainian lives.

Paralyzing the Russian industry

Washington also announced sanctions on Friday against nearly 200 oil tankers and LNG tankers operating from Russia and presented as being part of the ghost fleet from Moscow.

A number of the targeted vessels, however, are registered under the flag of Barbados and Panama.

Ukrainian President Volodymyr Zelensky welcomed American and British measures which deal a significant blow to the financial foundation of the Russian war machine.

Beyond producers and vessels, American sanctions target the entire sector, targeting in particular a certain number of intermediaries, service providers in the oil fields as well as political leaders in the sector.

These American sanctions also include a ban on the provision of services offered by American companies specializing in the oil sector to the targeted companies, particularly in assistance with the extraction and production of petroleum products.

It will come into force on January 27, said the Treasury Department.

Expand sanctions

More broadly, the United States gives itself the possibility ofimpose sanctions on anyone who wishes to operate or has operated in the Russian energy sectoraccording to the ministry press release.

These sanctions are in addition to the numerous measures already put in place, including the introduction of a capped price for Russian oil, since December 2022.

Open in full screen mode

Washington announced on November 21 a series of restrictions targeting around fifty Russian banking establishments, including Gazprom’s financial subsidiary, Gazprombank, in order, already, to reduce revenues from the sale of hydrocarbons.

Asked about the fate of these sanctions under the next government, a senior American official estimated, during an exchange with the press, that it was totally within its responsibility to decide if, when and under what conditions it could lift the sanctions that we have put in place.

He added that these measures would provide, by weakening Moscow, a significant leverage both to the administration of Donald Trump and to Ukraine to negotiate a just and lasting peace.

The sanctions result in the freezing of assets held directly or indirectly by the targeted companies in the United States as well as the ban on companies based in the United States, or American citizens, from trading with these sanctions targets, at the risk of be sanctioned in turn.