US and UK toughen sanctions on Russian energy industry

Some of the measures announced by the US Treasury on Friday will be put into law, meaning the incoming Trump administration will need to involve Congress if it wants to lift them.

Washington is also moving to severely limit who can legally purchase Russian energy, and going after what it called Moscow’s “shadow fleet” of vessels that ship oil around the world.

US Treasury Secretary Janet Yellen said the actions were “ratcheting up the sanctions risk associated with Russia’s oil trade, including shipping and financial facilitation in support of Russia’s oil exports.”

President Joe Biden said Russian leader Vladimir Putin was in “tough shape”, adding that “it’s really important that he not have any breathing room to continue to do the god-awful things he continues to do.”

Ukraine’s president, Volodymyr Zelensky, thanked the US for what he called its “bipartisan support”.

Since the beginning of the war in Ukraine, a price cap on oil has been among the key measures designed to curb Russia’s energy exports.

But as Olga Khakova from the Atlantic Council’s Global Energy Centre explained, its effectiveness was “diluted”, external because it was also trying to avoid the volume of Russian oil in the market dropping.

This was due to concerns about the impact reduced supply would have on the global economy.

But experts said the oil market was now in a healthier position.

“US oil production (and exports) are at record levels and rising, and therefore the price impact of taking Russian oil off the market, the objective of today’s sanctions, will be attenuated,” said Daniel Fried, a distinguished fellow at the Atlantic Council.

“The US government has gone after the Russian oil sector in a big way, intending to deal what may turn out to be a body blow,” Fried added.

John Herbst, a former US ambassador to Ukraine, said while the steps were “excellent”, their implementation would be critical.

“Which means that it is the Trump administration that will determine if these measures do in fact put pressure on the Russian economy,” he said.