U.S. Targets Russian Tanker and its Managers in Price Cap Enforcement

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The United States with the support of its Western Allies is continuing to target tankers violating the year-old Russian oil price cap and other efforts raising money for Russia. The U.S. Treasury announced today its second action of 2024 focusing on one Liberian-registered tanker that it says is controlled by Russia as well as the several UAE-based management firms associated with this and other tankers. At the same time, the U.S. took steps to implement G7 commitments to ban the importation of Russian diamonds.

Since October 2023 when the U.S. began enforcement efforts on the Price Cap, Reuters calculates about 27 tankers have been listed for carrying Russian oil above $60 while using a Western maritime service. The actions bar Americans from having business dealings with the tankers but also appear to be influencing other countries from dealing with the tankers in fear of U.S. retribution.

“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,” said Under Secretary of the Treasury for Terrorism and Financial Intelligence Brian Nelson. “Today’s action against vessels violating the price cap on Russian oil should serve as a continued warning that we can and will enforce violations of the cap.”

The tanker at the center of today’s actions is the 115,850 dwt NS Leader, built in 2007 and registered in Liberia. The registered owners are NS Leader Shipping in Liberia, but the U.S. is asserting the “Government of the Russian Federation is the ultimate owner” as it centered on the tanker and a series of firms all linked to the vessel. In addition to blocking the tanker, they also listed the registered owner NS Leader Shipping.

According to the U.S. information, the NS Leader made five port calls in Russian ports in 2023. Last November, the U.S. asserts the tanker delivered oil prices at over $80 per barrel, more than $20 above the $60 cap established in December 2022. They report that United Arab Emirates-based Zeenit Supply and Trading DMCC sold the Russian Urals crude oil that was transported on the vessel. 

UAE-based Oil Tankers SCF Mgmt FZCO, which has managed the NS Leader since September 2023, including during the November 2023 voyage during which the NS Leader carried above-cap crude oil of Russian Federation origin, was also included in today’s action. The U.S., United Kingdom, and European Union also have sanctioned SUN Ship Management D Ltd., which previously managed the NS Leader between April 2022 to September 2023. 

“Oil Tankers SCF manages oil tankers beneficially owned by the Government of the Russian Federation through Sovcomflot, a Russian state-owned shipping company,” the announcement states noting that the company was previously listed in an Executive Order. “Oil Tankers SCF also manages the U.S.-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,” they report. The United Kingdom has also sanctioned Oil Tankers SCF.

As they tracked the activity of the vessel, the U.S. asserts two other UAE firms appeared which the U.S. notes “were founded within roughly a week of one another in July 2022” and share a business manager. Today’s action lists Zeenit and UAE-based Talassa Shipping DMCC as having engaged in shipping multiple cargos together of crude oil of Russian Federation origin using vessels that loaded in Russian ports in 2023. 

The U.S. Department of the Treasury’s Office of Foreign Assets Control also today issued two determinations prohibiting the importation of certain categories of diamonds mined in Russia. First, OFAC issued a determination prohibiting the importation of non-industrial diamonds mined or extracted in Russia, notwithstanding whether they have been substantially transformed in a third country, effective beginning on March 1, 2024, for certain categories of diamonds, and expanding on September 1, 2024, to include additional categories. Second, OFAC issued a determination prohibiting the importation of diamond jewelry and unsorted diamonds of Russian Federation origin or exported from the Russian Federation, effective March 1, 2024. 

They noted that these prohibitions are intended to implement the December 2023 G7 commitments to impose phased restrictions on the importation of diamonds mined or extracted in Russia. OFAC reports it intends to issue additional public guidance regarding these determinations.

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