Page 64 - RusRPTAug24

Office of Foreign Assets Control (OFAC) is now required to unblock assets linked to US jurisdiction. This applies even to cases where the investor already has permission from the Belgian Treasury to dispose of these assets. This is stated on the NSD website. NSD lists such securities on its website: the list contains more than 9,000 items, including shares, bonds, and ETFs. “The client must independently determine in each specific case whether OFAC’s general permission [to wind down operations with NSD until August 13] is applicable or whether individual permission to unblock assets must be provided,” the Russian depository writes. Representatives of NSD, Euroclear and OFAC did not respond to Vedomosti’s request.
The Russian financial system is still not comprehensively sanctioned,
with many banks and types of transactions exempt from sanctions. Key institutions such as Gazprombank are exempt due to their critical role in Russia’s foreign trade. Furthermore, restrictions are not consistent across coalition jurisdictions. It is also important to highlight that money is much more fungible than physical goods and, thus, can find its way via financial centres in third countries (e.g., Hong Kong, Singapore, Dubai) that are not part of the sanctions coalition (Hilgenstock et al., 2024b).
UK, EU member states will step up inspections of Russian oil fleet, Bloomberg says. An "unspecified number" of governments are expected to approve the plan on July 18, during a meeting of the European Political Community hosted by British Prime Minister Keir Starmer in the UK, according to a draft statement.
Oil, the biggest source of Russia’s export earnings, is the key target of sanctions, reports BOFIT. Oil & gas are central to Russia’s export revenues and government finances. Russian Customs reports that oil & natural gas accounted for about 60 % of Russia’s total goods exports in 2023. Last year, oil & gas revenues accounted for about 30 % of federal budget revenues. Most of that came from extraction taxes on crude oil.
Key sanctions related to oil are the EU import ban on Russian oil and the G7 and EU price ceiling mechanism. The intent of the price-ceiling system is to limit Russia’s oil export revenues by forcing the sale of crude at a discount without reducing the volume of exports to such an extent that it drives up global oil prices. Provision of critical services is banned for vessels that transport Russian oil sold above the price ceiling. Similar restrictions have also been imposed on Russian refined oil products.
Russia has managed to partly circumvent the price mechanism through the use of a fleet of shadow tankers that do not rely on services from sanctioning countries. According to estimates by CREA and the Kyiv School of Economics (KSE), about 80 % of Russian crude oil has been transported on shadow tankers in recent months in avoidance of the price ceiling. The IEA and CREA estimate that the average price of a barrel of Urals blend crude has in recent months been in the range of $65–75, which is well above the price ceiling of $60. Even under the shadow system, Urals was still selling at a $12–13 discount relative to North Sea dated. About 40 % of Russian petroleum products are estimated to be shipped using shadow vessels. The IEA estimates the average price of Russian premium products has remained well
64 RUSSIA Country Report August 2024 www.intellinews.com