The United States imposes new sanctions to put pressure on the Russian energy sector

The United States on Friday announced new sanctions targeting Russia’s energy sector and a “shadow fleet” of oil tankers in what may be a final attempt by the Biden administration to cripple the Russian economy in response to Moscow’s war in Ukraine.

It was President Biden Cautious in his approach Russia imposed sanctions on the Russian energy sector for fear that stopping its exports would lead to a rise in gasoline prices around the world. But US officials said that improving global oil supplies and declining inflation represent an opportunity to put more pressure on the Russian oil industry as the war approaches its fourth year.

Despite concerted efforts by Western allies to punish Moscow economically for its actions, the Russian economy avoided the collapse that many economists predicted.

The moves taken by the Biden administration will put the onus on the Trump administration to decide whether to implement sanctions or not. Senior Biden administration officials demurred when asked whether sanctions had been discussed with President-elect Donald J. Trump’s transition team, but said they expected the measures would provide the incoming administration with additional leverage over Russia to negotiate an end to the war.

Treasury Secretary Janet L. Yellen in a statement: “The United States is taking sweeping measures against Russia’s main source of revenue to fund its brutal and illegal war against Ukraine.” He added: “With today’s sanctions, we increase the sanctions risks associated with Russian oil trade, including shipping and financial facilities to support Russian oil exports.”

Oil prices jumped on Friday before the sanctions were announced amid concerns that the new restrictions, coupled with severe weather in the United States and wildfires in California, could restrict global energy supplies.

The new sanctions target more than 180 ships from the Russian fleet of oil tankers that Moscow has used to evade current oil sanctions. They also blacklisted two major Russian oil producers, Gazprom Neft and Surgut Neftegaz, and their subsidiaries.

The sanctions target Russian LNG projects, Russian energy officials and service providers that support the country’s energy industry. It limits some exceptions that were put in place to allow banks to continue facilitating Russian energy transactions.

US sanctions could essentially cut off any person or company from the Western financial system.

The Biden administration said this would significantly undermine Russian oil revenues and cost the Russian economy billions of dollars per month. The senior officials, who spoke on the condition of anonymity to discuss the administration’s thinking, described the sanctions package as the most significant yet on Russia’s energy sector.

Since the start of the war, Biden has been wary of destabilizing global oil markets while inflation was rising. In 2022, the G7 established an “oil price cap” that was intended to limit the amount of revenue Russia could earn from the oil it exports. Over time, the effectiveness of that strategy diminished as Russia took measures, such as its own shadow fleet of aging tankers, To circumvent sanctions.

But with inflation under control and the presidential elections over, the administration began to take a more aggressive approach to dealing with Russia in its final months.

Dalip Singh, deputy national security adviser for international economics, said it was a “fair question” to ask why Biden waited until the end of the administration to impose such sanctions.

“For sanctions to be successful, they must be sustainable,” Singh said in a statement. “This does not mean they should be costless — sanctions are not at all — but to work, they must impact the target more than they harm the U.S. and global economy.”

In late November, the Treasury Department imposed sanctions on Russia’s Gazprom Bank, a major financial institution that serves as a conduit for Russian energy payments and purchases of military equipment that Moscow uses in Ukraine.

Last month, the United States transferred $20 billion to Ukraine in the form of a loan that will be repaid using interest earned on the frozen assets of the Russian Central Bank.

Although the Russian economy has proven its resilience, it is still under pressure.

High inflation has prompted the country’s central bank to raise benchmark interest rates to 21 percent. Economic growth slows, and product shortages increase.

The Russian economy is expected to grow by 1.3 percent next year, according to the International Monetary Fund, down from 3.6 percent in 2024. Russia’s annual inflation rate will reach about 10 percent in 2024, with the prices of many basic food items growing by Two or three times that number. General number.

The national currency, the ruble, fell in November to its weakest level since the beginning of the war, 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 implementing them and potentially rolling them back.

Mr. Trump has indicated that he wants to broker a deal with Russia and Ukraine to end the war. While Trump has used sanctions aggressively while in office, he expressed concerns during his election campaign last year about the impact sanctions could have on the dollar and its status as the world’s reserve currency.

“I use sanctions very aggressively against countries that deserve them, and then I remove them,” Trump said at the Economic Club of New York in September, adding: “I want to use sanctions as little as possible.”