Clamping Down on Putin’s Oil Profits

A US-led plan seeks to avert a spike in global crude prices from new European sanctions

- Christopher Condon

Putin and Xi during their meeting on Sept. 16

Something odd happened this spring as European governments prepped their sixth package of sanctions against Russia. Washington, which has spearheaded the international effort to ratchet up the pressure on Moscow as punishment for the invasion of Ukraine, looked at one portion of the plan and grew alarmed about the potential fallout. In the months since, US Treasury officials have been working frantically to create a workaround.

Make no mistake, the Biden administration isn’t concerned about inflicting too much pain on the Kremlin. It is, however, worried the European penalties could backfire, with devastating consequences for consumers and businesses in the US, Europe, and other countries already feeling the squeeze of high energy prices. In response, the US Treasury cooked up what appears to be a clever solution—though one that could lead to a dangerous showdown with Moscow.

The sanctions in question target Russian oil. In addition to prohibiting almost all seaborne imports of Russian crude, European Union nations agreed in June to ban companies in the 27-country bloc from providing maritime services for tankers transporting the controversial cargo anywhere in the world, effective Dec. 5. The UK and Switzerland have said they would follow suit.