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U.S. senators have put forward legislation that would impose secondary sanctions on Russian crude oil, Reuters said on Tuesday, in a move that could provoke two of Russia's largest oil importers, China and India.
Democratic Senator Chris Van Hollen and Republican Senator Pat Toomey—two members of the Senate Banking, Housing, and Urban Affairs Committee—have implored the Biden Administration to enact secondary sanctions on Russia's crude oil and crude oil products. If passed, the legislation would target banks and other financial institutions, insurers, and brokers of Russian oil that exceed a specific price cap, which the senators suggest should be imposed no later than March 2023.
Targeting banks, the two senators said, would make it more difficult for Russia to evade the price cap by making deals with countries that are not a party to the cap discussed earlier this month, outside the G7.
The administration requires "new authority from Congress" to choke off Russia's oil revenues, a statement from Van Hollen reads.
The ultimate goal of the legislation is to make it harder for buyers to circumvent the price cap, designed to restrict Russia's revenue stream from the sale of oil and oil products, which it would then use to fund its activities in Ukraine.
"I promise to work with Senator Van Hollen to get this bill enacted as soon as possible so that Russia can no longer profit from the oil sales funding its war in Ukraine," Toomey said at a Committee meeting on Tuesday, according to Reuters.
The Committee also believes that a price cap would "reduce the potential for price spikes in the market," Elizabeth Rosenberg, Treasury Assistant Secretary for Terrorist Financing and Financial Crimes, said at the Committee meeting.
Rosenberg also indicated that guidelines are coming that would address the issue of blending Russian crude with crude from other sources to skirt those sanctions.
By Julianne Geiger for Oilprice.com
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Julianne Geiger is a veteran editor, writer and researcher for Oilprice.com, and a member of the Creative Professionals Networking Group.