U.S. Expands Sanctions on Russia’s Oil Sector to Cut War Funding

The U.S. Department of the Treasury, alongside the UK, has escalated sanctions against Russia's oil sector, a key revenue source funding the war in Ukraine.

The new measures target two major Russian oil producers, Gazprom Neft and Surgutneftegas, along with over 180 oil-carrying vessels, dozens of traders, oilfield service providers, and energy officials. A new determination under Executive Order 14024 expands sanctions to any entity operating in Russia's energy sector, while a ban on U.S. petroleum services will further cripple Russia’s oil extraction and production.

Additionally, Treasury sanctioned shadowy traders and maritime insurers facilitating Russia’s illicit oil exports. These actions build on the G7's efforts to limit Russian energy revenues and increase sanctions risks for the country's oil trade.

Sanctions Implications: The new sanctions block all property and interests of the designated individuals and entities within U.S. jurisdiction or under U.S. control, with prohibited transactions involving blocked persons. U.S. persons or entities must report any dealings with these blocked individuals, and any entities 50% or more owned by blocked persons are also sanctioned. Violating these sanctions can lead to penalties, and foreign financial institutions facilitating transactions for blocked entities may also face sanctions. Non-U.S. persons are prohibited from evading or conspiring to violate these U.S. sanctions.

For more details, foreign financial institutions are advised to consult the updated OFAC guidance and FAQs. The sanctions aim to bring about behavioral change rather than punishment, with the potential for removal from the sanctions list under specific conditions.