Page 17 - bne IntelliNews Russia OUTLOOK 2025

The US is also sanctioning Rosnefteflot, the shipping arm of the Russian oil company Rosneft. Rosneft itself is subject to some earlier sanctions and was not included in the new lists.
The sanction list is also expanded to cover entities supporting production and exports in Russia’s steelmaking and mining industries, as well as senior executives of state nuclear corporation Rosatom.
Targeting the tankers could prove to be particularly effective. In December 2023, the US’ Office of Foreign Assets Control (OFAC) changed tack, introducing its so-called strangulation sanctions that target individual companies, banks and ships that do business with Russia, threatening them with secondary sanctions. Most of the entities that received the OFAC letters broke off relations with their Russian clients and even China and India closed their ports to the 40-plus listed Russian shadow fleet tankers, effectively taking them out of service. Now that list of tankers has been dramatically expanded to include about a third of the tankers believed to be in Russia’s shadow fleet.
The EU passed its fifteenth package of sanctions that included hundreds of new names and tightened measures against Russia’s shadow fleet, but in general the sanctions regime has failed to have the desired effect of hobbling Russia’s economy or limiting the Kremlin’s income.
Oil price cap sanctions
These were designed to limit the selling price of Russian oil to $60, yet not affect the flow of Russian oil to the market. As they depended on Western dominance of the maritime insurance business, they completely failed after Russia sold oil to Asia. Moscow has ignored the sanctions and built up its shadow fleet which uses Russian, Chinese and Indian insurance. Not one barrel of Russian oil has been sold under the $60 cap since the sanctions were imposed on December 5, 2022.
Strangulation sanctions
In December 2023, Office of Foreign Assets Control (OFAC), on the authority of a presidential executive order, issued letters to a number of shipping companies threatening them with secondary sanctions if they continued to work with Russia. In all some 35 ships were sanctioned in this way and effectively taken out of circulation. To date a total of 70 ships have been sanctioned in this way. The UK also sanctioned 40 ships in December 2024 in the same way.
Russia has responded by renaming and reflagging some of the ships and putting them back in circulation, but this process takes time.
17 Russia OUTLOOK 2025 www.intellinews.com