US Sees Oil Price Cap Evasion in Russian Far East

The US and its allies are seeking to reduce Russia's income from energy exports in response to the war in Ukraine. File Image / Pixabay

The authorities in the US have warned some companies in the Russian Far East may be evading the Western-imposed price cap on the country's oil exports.

The US suspects some crude oil exports taken from the Eastern Siberia Pacific Ocean (ESPO) pipeline are currently being exported via ports in the Russian Far East and traded at prices above the cap imposed last year, the Office of Foreign Assets Control said in a note on its website on Monday.

The G7 countries, the European Union and Australia imposed a price cap of $60/mt on Russian crude exports on December 5, banning companies from providing services like insurance to tankers carrying Russian cargoes traded at higher price levels. A similar scheme was introduced for refined products exports in February.

"OFAC is aware of reports that ESPO and other crudes exported via Pacific ports in the Russian Federation, such as Kozmino, may be trading above the price cap and may be using covered services provided by US persons," OFAC said in Monday's note.

"These US service providers may be unaware that they are providing covered services involving Russian oil purchased above the price cap, as the non-US persons involved in the exports may have provided incomplete or false documentation or used other deceptive practices."

Tankers carrying these exports may be disguising their movements, the sanctions body said.

"Specifically, some tankers may be manipulating their Automatic Identification Systems (AIS), a practice known as "spoofing," to disguise the fact that they have called at the port of Kozmino or other ports on the Russian Federation's eastern coastline," OFAC said.

"For example, basic vessel tracking data may show the tanker at one location, but more sophisticated reporting from maritime intelligence services may show that the vessel called at the port of Kozmino or another eastern port in the Russian Federation.

"Spoofing can also be used to mask ship-to-ship transfers carried out to disguise the origin of Russian oil.

"US persons providing covered services to tankers should view AIS manipulation that disguises a tanker's port of call in the Russian Federation as evidence of possible evasion of the price cap."