…United Kingdom too

The United States has made real its promise last weekend to impose new series of sanctions against Russian banks, key industries, and individuals, as well as third-country persons suspected to be aiding Russia to evade sanction.

Coming exactly one year after the Russia powered its war machine into Ukraine, the US new sanctions also target Russia’s metals and mining industry and third-country individuals and companies connected to Russia’s sanctions evasion efforts, including those related to arms trafficking and illicit finance, the department of the treasury said yesterday

Treasury is targeting the metals and mining sector of the Russian Federation economy and is also imposing sanctions on 22 individuals and 83 entities.

Also Read: Ukraine: US Will Today Announce ‘Sweeping’ Sanctions Against Russia

“Today’s action, together with additional measures taken by the department of state, the department of commerce, and the office of the U.S. trade representative, in coordination with allies and G7 partners, further isolates Russia from the international economy and hinders Russia’s ability to obtain the capital, materials, technology, and support that sustain its war against Ukraine, which has killed thousands and displaced millions of people,” the Treasury said in a statement.

The U.S. is also imposing sanctions on numerous Russian banks and is also targeting wealth management-related entities and individuals that play key roles in Russia’s financial services sector.   

According to the report, the U.S. treasury department imagines that dozens of entities and individuals that were hit with sanctions today operate in industries that ultimately support Russia’s war against Ukraine.

Also Read: Price Cap Against Russia Oil Is Working – U.S.

“This includes firms that produce or import specialized, high-technology equipment used by Russian defense entities and companies that make advanced materials used in Russian weapons systems,” the Treasury said.

Separately, UK foreign secretary, James Cleverly, last weekend announced a new package of internationally coordinated sanctions and trade measures, including export bans on every item Russia has been found using on the battlefield to date.

The UK also sanctioned senior executives at Russian state-owned nuclear power company Rosatom, executives from Russia’s two largest defense companies, four banks, and other Russian elites.

Calculations from academics at the Institute of International Finance, Columbia University, and the University of California, show that Russia raked in significantly more money from its crude oil sales in the weeks that followed the oil price cap implemented on December 5 last year.
The report said Russia sold its crude oil for about $74 per barrel on average. The calculations are contained in a paper titled, “Assessing the Impact of International Sanctions on Russian Oil Exports” published on the Social Science Research Network.

The paper studied two things: the effects of the EU embargo and the G7 price cap on Russian seaborne crude oil.
“We find that Russia was able to redirect crude oil exports from Europe to alternative markets such as India, China, and Turkey but that export earnings were curbed substantially by the sizable discounts that Russian exporters had to accept in market segments where the impending EU embargo lowered demand.”

Also Read: Ukraine: US Will Today Announce ‘Sweeping’ Sanctions Against Russia

The report said it however do not find crude oil discounts as large as those reflected in Urals prices toward the end of 2022. “In particular, prices in market segments that are unaffected by lower European demand, e.g., exports from Russia’s Pacific Ocean ports, have not dropped in a meaningful way and shipments do not appear to comply with the price cap.

“Moreover, our surprising finding of a significant share of Russian crude oil being sold well-above the price cap level of $60 a barrel urgently calls for further investigation of these transactions and reinforces the need for stepped-up enforcement,” the authors said, and recommended that ‘the price caps on crude oil should be lowered as soon as possible.”

The analysis covered the four weeks following the implementation of the price cap.

By Bosco Agba

The Biden Administration has said that the sanctions against Russia are biting in, and “sharply” reducing the economic power of President Vladimir Putin to prosecute the war in Ukraine.

Speaking yesterday at the G20 meeting in India, the U.S. treasury secretary, Janet Yellen, said the U.S. and the world are witnessing “emerging markets negotiate deep discounts on Russian oil which keeps oil in the global market but sharply reduces the Kremlin’s take.
“The way I see it, our sanctions have had significant negative effect on Russia so far. While by some measures, the Russian economy has held up … Russia is now running a significant budget deficit,” Yellen said.

The price cap on Russian crude oil, which went into effect on December 5, was designed to reduce Russia’s oil revenues while allowing crude oil to keep flowing to prevent a spike in prices.

Also Read: Russia’s Oil Exports Rise By 26% To 3.6m In One Week

About three weeks ago, another price cap came into effect—on Russia’s crude oil products such as diesel.
But some critics have argued that the claims on the effects of the price cap may not really be correct. Some say what has happened is that Russia’s crude oil has come changing destinations from Europe to India and China – two countries not abiding by the price caps.

The crude oil price cap was set at $60 per barrel, although the Russian Urals grade traded at less than $50 in January, so Russia’s crude was already selling well below the price cap.

Last December, President Vladimir Putin banned the supply of Russian crude oil and crude oil products to any company abiding by the price cap as of February 1, 2023.

Also Read: Sanctions And Slowing Investment In Infrastructure May Dent Russia’s Oil Sector

Yellen has been a staunch support of the oil price cap mechanism. “The caps we have just set will now serve a critical role in our global coalition’s work to degrade Russia’s ability to prosecute its illegal war. Combined with our historic sanctions, we are forcing Putin to choose between funding his brutal war or propping up his struggling economy.

“And, we are disrupting Russia’s military supply chains, making it harder for the Kremlin to equip its troops and continue this unprovoked invasion,” the US senior official was quoted saying earlier this month in a statement.

By Bosco Agba

In apparent retaliation for Western sanctions, Russia is planning to slash crude exports from western ports by one-quarter in March and April, expanding the 500,000 barrel-per-day cuts it earlier announced for next.

Citing three sources in the Russian oil market, Reuters says that the plan to cut exports by up to one-quarter from Western ports goes beyond the 500,000 bpd production cut planned for March.

However, there is no confirmation of the reported 25% cut in exports from Western ports from Russian authorities, and according to the news agency, Russia’s pipeline giant, Transneft, has not responded to for comment as of press time. 

Also Read: Russia’s Oil Exports Rise By 26% To 3.6m In One Week

Western sanctions are forcing Moscow to perform various oil market acrobatics, from output cuts and the creation of new pricing mechanisms for its flagship Urals crude to selling its crude to China and India at massive discounts.

When Russia announced the 500,000 bpd production cut for March, markets were largely unshaken, despite the drop in Russian seaborne crude exports already in place at the time

At 12:15 p.m. EST on Wednesday, Brent crude was trading at $81.02, down 2.44% on the day, while WTI was trading at $74.35, down 2.63% on the day.

Russia’s original plans to cut production by 500,000 bpd in March would amount to 5% of Russia’s output or 0.5% of global production, according to Reuters

Also Read: Russia ‘Mapping’ Critical Energy Infrastructure, Say Dutch Intelligence Agencies

Cutting from Western ports reflects the diversion of Russian crude to eastern markets, primarily Indian and China, but also Turkey. The rerouting, however, has hit snags with refined products, which have been under Western sanctions since February 5th.

According to U.S. Treasury officials, the decision to cut output in March does not reflect retaliation, as much as it reflects Moscow’s inability to sell its normal amount of oil.

By Bosco Agba

Russia’s President, Vladimir Putin has blamed Ukraine for its invasion, and the West for “provoking” Russia into the action.
In what looked like a new change of gear in the crises, Putin in his latest speech yesterday also issued a new warning to the West, while suspending Russia’s participation in a major nuclear arms control treaty with the U.S. 

A top official of the Russian administration was however quoted of having tweeted to clarify that the Russian suspension of the Treaty “does not mean withdrawal; return to the Treaty remains possible under certain circumstances.”

In his two-hour-long state of the nation address yesterday, Putin accused the West and Ukraine of starting the war by provoking Russia with NATO’s expansion and new European anti-rocket defense systems. 

Putin also used the speech to announce that Russia is suspending its participation in the nuclear arms control treaty, the New START treaty, the last remaining arms control treaty between Russia and the United States.

Also Read: Russia’s Oil Exports Rise By 26% To 3.6m In One Week

Previously, the U.S. and Russia had agreed to extend the treaty through February 4, 2026. The Treaty between the U.S. and the Russian Federation on Measures for the Further Reduction and Limitation of Strategic Offensive Arms, also known as the New START Treaty, entered into force in February 2011.

Russia’s representative to the international organizations in Vienna, Mikhail Ulyanov, tweeted to clarify that the Russian suspension of the Treaty “does not mean withdrawal; return to the Treaty remains possible under certain circumstances.”
Putin said in his speech that Russia should be ready to test nuclear weapons if necessary.

“Of course, we will not do this first. But if the United States conducts tests, then we will. No one should have dangerous illusions that global strategic parity can be destroyed,” Putin said, as carried by Reuters.

In other comments in the address, Putin also said, referring to the West, “They started the war, and we used the force in order to stop it.”
Putin’s speech comes a year – almost to the day – after the Russian invasion of Ukraine and a day after U.S. President Joe Biden met with Ukrainian President Volodymyr Zelenskyy in Kyiv.

Also Read: Sanctions And Slowing Investment In Infrastructure May Dent Russia’s Oil Sector

“When Putin launched his invasion nearly one year ago, he thought Ukraine was weak and the West was divided. He thought he could outlast us. But he was dead wrong,” President Biden said on Monday

Russia yesterday called a UN Security Council meeting on the issue of the Nord Stream pipeline sabotage of last September.
Associated Press reported that the Security Council had reviewed Russia’s draft resolution on Monday, but said there was opposition to the resolution.

The meeting request comes after asking for a resolution that calls for a UN investigation of the sabotage. Denmark, Germany, and Sweden issued a letter to the Security Council member with its conclusion of the sabotage. According to their investigations, the Nord Stream 1 and 2 gas pipelines suffered damage “by powerful explosions due to sabotage.”

The investigations by the trio are ongoing, and while they have kept Russian authorities apprised of the investigations, no end date for the investigations has been given.

Also Read: Russia ‘Mapping’ Critical Energy Infrastructure, Say Dutch Intelligence Agencies

But while the three stated in the letter that they’ve kept Russia informed about the investigations, Russia repeated this week its call on Sweden to share its findings about the blast.

It was previously thought that the UN Security Council could vote on Russia’s resolution asking the UN to investigate the sabotage on Tuesday. But diplomats who spoke to AP said a Tuesday vote was not expected.

Russia has accused the United States of being behind the sabotage. Veteran journalist Seymour Hirsh also concluded that the United States was behind it—an insinuation that Washington quickly—and flat out—denied.

Also Read: Russia’s Oil Exports Rise By 26% To 3.6m In One Week

Nord Stream 2 was never put into operation after Germany axed the certification process following the Russian invasion of Ukraine. Russia, for its part, shut down Nord Stream 1 indefinitely in early September, claiming an inability to repair gas turbines because of the Western sanctions

By Bosco Agba