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The U.S. Administration is considering imposing secondary sanctions on buyers of Russian oil as a means to deprive Putin of oil revenues and undermine Russia’s position as an energy export powerhouse in the long term, the New York Times reported on Thursday, quoting current and former U.S. officials.
Secondary sanctions that are being studied would mean that the U.S. would block buyers of Russian oil from doing business in America or with American and European companies, much like the U.S. tried to do with Iran when the Trump Administration re-imposed sanctions on Iranian oil exports in 2018.
The Biden Administration is also considering additional measures such as a price cap on Russian oil, NYT says.
The U.S. Administration is weary of trying to take a large chunk of Russian oil exports off the market because oil prices would soar to record highs, further exacerbating the inflation and record-high gasoline prices for said Administration ahead of the November elections while raising oil revenues for Putin.
Therefore, the U.S. is looking to convince countries to reduce and eventually phase out imports of Russian oil, U.S. officials tell NYT.
Officials are now looking at “what can be done in the more immediate term to reduce the revenues that the Kremlin is generating from selling oil, and make sure countries outside the sanctions coalition, like China and India, don’t undercut the sanctions by just buying more oil,” Edward Fishman, who oversaw sanctions policy at the State Department after Russia annexed Crimea in 2014, told NYT.
China and India aren’t shying away from Russian crude, although some Chinese state giants haven’t ramped up imports of spot cargoes from Russia despite the steep discounts at which Russian oil is selling.
In India, cheap Russian crude oil is attracting India’s price-sensitive buyers to the point that Russia became the fourth largest oil supplier to India in April, moving up from the 10th place in March, according to shipment-tracking data compiled by Reuters.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.