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US Seeks to Claw Back Russian Oil Trade Under the G7 Price Cap

The United States will push shippers to disclose more information about their Russian oil dealings in a bid to enforce sanctions, U.S. officials said on Monday, while acknowledging that a big chunk of the trade has already escaped Western oversight after Russia built a parallel fleet.

The Group of Seven countries (G7) agreed a price for Russian crude in December last year, which bans Western companies from providing maritime services including financing, insurance and shipping for oil sold above $60 per barrel.

“A significant amount of (Russian) oil can in fact flow outside the G7,” one of the officials said.

“For most of last summer and through the fall, Russia was really selling oil above the caps through two distinct channels. One was the non-compliant trade use coalition (G7) services … And second via this alternative fleet, which used to be a small part but grew significantly.”

The G7 scheme, rather than a blanket ban on Russian oil, aims to keep a lid on global oil prices and reduce the cash available for Moscow’s invasion of Ukraine.

The officials said that on top of targeted sanctions, they are pushing for an “itemisation of costs” when a Russian oil buyer presents documentation to Western insurance providers and shippers to prove the trade took place under the cap.

Crucially, there is a push to have documentation “per voyage” if a buyer uses the same Western services on a regular basis.

The U.S. began imposing sanctions on specific tanker owners in relation to breaking price cap rules for the first time in October.

Western powers have said that while Russian oil revenue was for many months significantly cut thanks to the cap, the system was being rigged and the Kremlin’s alternative shadow fleet has increasingly taken over.

The official added that the rapid build-up of a parallel fleet had already come at a “great cost” to the Kremlin.

Washington wants to increase that cost and expose a system whereby Russian oil buyers are forced to use certain Kremlin-backed brokers, who prop up the price, the officials said, without elaborating on how this would be done.

Source : Reuters