The G7 price cap coalition imposing a price cap on Russian oil issued an enforcement alert detailing ways that market players evade the mechanism and information on how people can report breaches, the U.S. Treasury Department's website showed on Friday.
The United States, other G7 countries and the European Union announced a price cap of $60 a barrel on Russian oil in late 2022 in response to Moscow's invasion of Ukraine in February of that year.
"Illicit activity could occur across multiple entities and sectors involved in the trade of Russian oil and oil products," the alert said. "Poor and insufficient compliance processes by the entities involved could lead to breaches" of the price cap.
Last October, the U.S. Treasury began imposing sanctions on tankers it suspected of carrying oil above the price cap, and has since designated about two dozen tankers. The cap bans Western companies from providing service such as insurance, transportation and financing for oil sold above the cap.
The price cap seeks to cut Russia's ability to fund the war in Ukraine by reducing its oil revenues while also ensuring that global oil markets are well supplied. The West's sanctions have shifted much of Russia's oil trade from traditional customers in Europe to India and China, and have forced some shippers to turn to a so-called "shadow fleet" of aging tankers which the Treasury says cuts into Russia's revenues.
The alert said some coalition members, including the EU, have introduced measures to more closely monitor the sale of tankers to third countries and prevent them from being used to transport Russian oil priced above the cap.
"Industry stakeholders are encouraged to report to relevant competent authorities tanker sales they observe which display evidence to indicate that they could be used as part of the shadow fleet," the alert said.
