Reuters: US, allies press Liberia, Marshall Islands, Panama over oil sanctions against Russia

The US, EU and UK are pressuring Liberia, the Marshall Islands and Panama to step up surveillance of ships flying their flags to ensure they are not carrying Russian oil sold above the price ceiling, Reuters reported on December 1, citing a source, UNN reported. 

Details

Against the backdrop of the price ceiling on Russian oil transported by sea, Russia is increasingly having to use the so-called "shadow fleet" of old tankers to transport oil and avoid the restriction. This fleet transports oil to countries including China and India, much further than Russia's traditional customer base, and significantly increases shipping costs, the publication points out.

Panama, the Republic of the Marshall Islands, and Liberia have allowed some of these ships to fly their flags, according to Lloyd's List Intelligence and oil analysts. This practice, known as "flag hopping," allows some front companies that were created to trade Russian oil to sail ships under these flags and evade sanctions, the publication notes.

Lloyd's List Intelligence said that almost 40% of the approximately 535 tankers in the "shadow fleet" are registered through companies registered in the Marshall Islands.

The letters warn the three countries about the increasingly frequent circumvention of the G7 price ceiling on Russian oil and the high level of risk associated with vessels that do not have Western insurance and other services and are looking for other flags, the source said. The three countries themselves are not at risk of Russian sanctions, the newspaper writes.

The purpose of the pressure is reportedly not to reduce the number of ships transporting Russian oil by water, but to strengthen compliance with the price ceiling and make it more expensive for Russia to transport oil without using Western transportation services. Also, as indicated, there is a desire to give leverage to countries that buy oil outside the price ceiling coalition to get oil from Russia at reduced prices.

The source added that Panama has traditionally been responsive to U.S. requests to combat illegal activities.

The group asks Liberia and the Marshall Islands to raise awareness among market participants that their flag should not be used for tankers carrying oil above the $60 price ceiling.

The letters were signed by Lindsay White, head of international finance at the UK Treasury, John Berrigan, head of the European Commission's financial services division, and Brian Nelson, the top terrorist financing official at the US Treasury Department, the source said.

Reuters has not seen the letters. The U.S. Treasury Department, the British Embassy in Washington and the EU Delegation to the United States did not immediately respond to requests for comment.

Addendum

The price ceiling, which aims to reduce Russian export revenues while maintaining global oil supplies, was introduced in late 2022 but only recently came into effect.

This mechanism prohibits Western companies from providing services for offshore activities, such as transportation, insurance, and financing, that facilitate the trade of Russian oil sold above the price ceiling.