The United States on Friday announced new sanctions targeting Russia’s energy sector and its “shadow fleet” of oil tankers. This could be the Biden administration’s final attempt to cripple Russia’s economy in response to Russia’s war in Ukraine.
President Biden is cautious about imposing sanctions on Russia’s energy sector, fearing that the suspension of Russian exports will cause gasoline prices to soar around the world. But U.S. officials said the health of global oil supplies and easing inflation were an opportunity to put further pressure on Russia’s oil industry as the war approaches its fourth year.
Despite concerted efforts by Western allies to economically punish Russia for its actions, Russia’s economy avoided the collapse that many economists had predicted.
The Biden administration’s move puts the onus on the Trump administration to decide whether to impose sanctions. Biden administration officials balked at questions about whether the sanctions had been discussed with President-elect Donald J. He said he is expected to gain.
“The United States is taking sweeping action against Russia’s major source of revenue that funds its brutal and illegal war against Ukraine,” Treasury Secretary Janet L. Yellen said in a statement. “Today’s sanctions gradually increase sanctions risks related to Russia’s oil trade, including shipping and financial facilitation that support Russia’s oil exports.”
Oil prices soared on Friday ahead of the sanctions announcement due to severe weather in the United States and wildfires in California, as well as concerns that new regulations could throttle global energy supplies.
The new sanctions target more than 180 vessels in Russia’s shadow tanker fleet, which the Kremlin has used to circumvent existing oil sanctions. It also blacklisted two major Russian oil producers, Gazprom Neft and Surgutneftegaz, and their subsidiaries.
The sanctions target Russian liquefied natural gas projects, Russian energy officials and service providers supporting the country’s energy industry. And it limits some of the exceptions put in place to allow banks to continue facilitating Russian energy trading.
U.S. sanctions can effectively cut individuals and companies off from the Western financial system.
The Biden administration said this would significantly erode Russia’s oil revenues and cost the Russian economy billions of dollars a month. Senior administration officials, speaking on condition of anonymity to discuss the administration’s thinking, said the sanctions were the most significant yet against Russia’s energy sector.
Since the start of the war, Biden has been wary of turmoil in global oil markets amid soaring inflation. In 2022, the G7 countries imposed an oil “price cap” aimed at limiting the revenue Russia can earn from the oil it exports. Over time, that strategy’s effectiveness waned as Russia developed measures such as a shadow fleet of aging tankers to circumvent sanctions.
But with inflation under control and the presidential election over, the administration has taken a more aggressive approach toward Russia in its final months.
In late November, the Treasury Department imposed sanctions on Russia’s Gazprombank, a major financial institution that acts as a conduit for Russian energy payments and purchases of military equipment for use by the Russian government in Ukraine.
Last month, the United States transferred $20 billion to Ukraine in the form of a loan that would be repaid using interest earned from frozen assets at Russia’s central bank.
The Russian economy has proven resilient but remains under pressure.
Due to the high inflation rate, the country’s central bank has set the benchmark interest rate. 21 percent. Economic growth is slowing and product shortages are common.
Russia’s economy is expected to grow by 1.3% next year, up from 3.6% in 2024, according to the International Monetary Fund. Russia’s annual inflation rate in 2024 is close to 10%, with prices for many basic foods rising by two to three times that amount. Overall diagram.
Russia’s currency, the ruble, fell to its lowest level since the start of the war in November, reducing Russia’s purchasing power.
The effectiveness of the latest U.S. sanctions will ultimately be determined by the Trump administration, which will be responsible for enforcing and potentially reversing them.
Trump has expressed his desire to broker an agreement with Russia and Ukraine to end the war. Trump has aggressively used sanctions during his time in office, but during last year’s campaign he expressed concern about the impact they would have on the dollar and its status as the world’s reserve currency.
Trump told the New York Economic Club in September, “I will use very strong sanctions against countries that deserve them, and then I will lift them,” adding, “I will use sanctions to the bare minimum.” I want to,” he added.
