Economic Scenarios

The US and the UK impose new sanctions on Russia, which hurt Europe

The United States and the United Kingdom are raising the bar on the Russian energy sector, with the aim of seriously reducing the flow of Kremlin money fueling the war in Ukraine, in a new round of sanctions that, this time, risks having some effect on Moscow, but also on Europe.

In a major move announced today, the US Treasury Department, together with the United Kingdom, unveiled a series of tough new sanctions aimed at hitting Russia where it hurts: its oil profits.

The attempt to hit where it hurts

The Russian economy relies heavily on the export of oil and other energy resources. These new actions are intended to make the flow of money much more difficult. Here is the breakdown of the penalties:

  • Shadow Fleet Crackdown: The United States is prosecuting large numbers of oil tankers that are part of the informal so-called “shadow fleet” that continues to transport Russian oil at prices above the “Price Ceiling,” especially to Asia . These ships are often involved in shady deals to bring Russian oil to market, bypassing existing sanctions.
  • Big Oil on Alert: Two major Russian oil producers are now directly targeted by both the US and the UK. This sends a clear message: no one is off the table when it comes to supporting Russia's war effort.
  • Cutting support: The United States is also targeting Russian companies that provide services to the oil industry and Russian energy officials. Additionally, they are banning American companies from providing certain oil services to Russia.
  • Closing existing deals: While the new measures are tough, there is a grace period for companies to close existing deals with Russia in the energy sector. This gives businesses time to adjust, but still underlines the seriousness of the new sanctions and, more importantly, will have effects on energy prices in the West.
  • Global pressure: The State Department is also taking action, blocking two new liquefied natural gas projects and a major Russian oil project. Additionally, it is going after foreign companies that help Russia export its energy.

Oil well in Russia

This is all part of a broader strategy by the G7 and its allies to limit Russia's ability to finance its war machine. By targeting the energy sector, they aim to block one of the Kremlin's main sources of income. As Treasury Secretary Janet Yellen said, these actions are aimed at “increasing sanctions risk” associated with Russia's oil trade.

If you want to read the long list of entities sanctioned by the US and the UK you can read it here . It includes not only companies, but even individual ships registered in third countries that will now have no dealings with Western entities, not even indirectly.

An effect is already there: the price of oil has increased

The sanctions already have an effect, but probably not the desired one: the price of Brent oil has risen significantly , as you can see from the graph below, returning to above 80 dollars a barrel.

Moreover, the sanctions reduce the availability of oil on the market, and this operation has the effect of increasing the prices of supplies. A harsh law, but this is the market, which doesn't look at anyone. European countries will pay heavily for this price increase from an inflation point of view.


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The article The US and the UK impose new sanctions on Russia, which hurt Europe comes from Economic Scenarios .


This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/gli-usa-e-il-regno-unito-impongono-nuove-sanzioni-alla-russia-che-fanno-male-alleuropa/ on Mon, 13 Jan 2025 08:00:58 +0000.