The United States announced new sanctions on Friday targeting Russia’s energy sector and its “shadow fleet” of oil tankers, the Biden administration’s final effort to cripple the Russian economy in response to Moscow’s war in Ukraine. It is possible
President Biden has been cautious in his approach to sanctions on Russia’s energy sector due to concerns that cutting off its exports would drive up gasoline prices around the world. But U.S. officials said improved global oil supplies and softening inflation presented an opportunity to put more pressure on Russia’s oil industry as the war approaches its fourth year.
Despite a coordinated effort by Western allies to economically punish Moscow for its actions, the Russian economy has avoided the collapse that many economists had predicted.
The Biden administration’s steps would put the onus on the Trump administration to decide whether to impose sanctions. When asked whether newly elected President Donald J. While sanctions were discussed with Trump’s transition team, senior Biden administration officials were coy, but said they hoped they would provide the next administration with additional leverage over Russia to negotiate an end to the war. Measures will be taken to do so.
“The United States is taking sweeping action against Russia, a major source of revenue to finance its brutal and illegal war against Ukraine,” Treasury Secretary Janet L. Yellen said in a statement. “With today’s sanctions, we are increasing the risk of sanctions related to Russia’s oil trade, including shipping and financial facilities in support of Russia’s oil exports.”
Oil prices jumped on Friday ahead of the sanctions announcement, amid concerns that new restrictions could disrupt global energy supplies combined with severe weather in the United States and wildfires in California.
The new sanctions target more than 180 vessels from Russia’s fleet of shadow tankers that Moscow has used to evade existing oil sanctions. They also blacklisted two major Russian oil producers, Gazprom Neft and Surgutneftegas, and their subsidiaries.
The sanctions are aimed at Russian liquefied natural gas projects, Russian energy officials and service providers supporting the country’s energy industry. And they limit certain exceptions that are in place to allow banks to continue facilitating Russian energy transactions.
US sanctions can essentially isolate an individual or company from the Western financial system.
The Biden administration said this would significantly reduce Russia’s oil revenues and cost the Russian economy billions of dollars per month. Senior officials, speaking on condition of anonymity to discuss the administration’s thinking, described the sanctions package as the most significant ever imposed on Russia’s energy sector.
Mr Biden had been concerned about a slowdown in global oil markets since the start of the war, when inflation was rising. In 2022, the Group of 7 countries created an oil “price ceiling” intended to limit how much revenue Russia can earn from its exported oil. Over time, the effectiveness of that strategy diminished as Russia developed measures such as shadow fleets of older tankers to avoid sanctions.
However, with inflation under control and the presidential election over, the administration is taking a more hawkish stance toward Russia in its final months.
Dalip Singh, deputy national security adviser for international economics, said it was a “fair question” to ask why Mr Biden waited until the end of his administration to impose such sanctions.
“For sanctions to be successful, they must be sustainable,” Mr Singh said in a statement. “That doesn’t mean they have to be expensive – sanctions never are – but to be successful they have to affect the target more than harm the US and global economy.”
In late November, the Treasury Department imposed sanctions on Russia’s Gazprombank, a major financial institution that is a conduit for Russian energy payments and military equipment purchases that Moscow uses in Ukraine.
Last month, the United States transferred $20 billion to Ukraine in the form of a loan, which will be repaid using interest earned on Russia’s frozen central bank assets.
Although Russia’s economy has proven resilient, it is still under pressure.
High inflation has prompted the country’s central bank to raise benchmark interest rates. 21 percentEconomic growth is slowing, and shortages of products are acute.
The Russian economy is expected to grow 1.3 percent next year, up from 3.6 percent in 2024, according to the International Monetary Fund. Russia’s annual inflation rate in 2024 was about 10 percent, with prices of many basic foods rising at double or triple the rate. Overall figure.
The national currency, the ruble, fell to its weakest level since the start of the war in November, reducing Russia’s purchasing power.
The effectiveness of the latest round of US sanctions will ultimately be determined by the Trump administration, which will be responsible for imposing them and potentially withdrawing them.
Mr Trump has indicated he wants to reach a deal with Russia and Ukraine to end the war. While Mr. Trump has used sanctions aggressively while in office, he expressed concern during his campaign last year about what impact sanctions could have on the dollar and its status as the world’s reserve currency. Is.
“I use sanctions very powerfully against countries that deserve it, and then I remove them,” Mr. Trump said at the Economic Club of New York in September. He added, “I want to use sanctions as little as possible.”