US Sanctions on Russian Oil Sector as Ukraine Continues Drone Strikes
Last week US President Joe Biden announced a new wave of sanctions targeting Russia’s oil sector, a strategic move designed to curtail the Russia’s primary revenue stream and intensify economic pressure in response to its ongoing aggression in Ukraine. The decision underscores Washington’s commitment to leveraging economic tools to deter further hostilities and to weaken Moscow’s ability to sustain its military endeavours.
The sanctions, unveiled during a White House briefing, aim to limit Russia’s capacity to export crude oil and refined petroleum products, a sector that accounts for a significant portion of its national income. Key measures from the newly announced sanctions include restrictions on technology exports essential for oil exploration and production, as well as penalties targeting Russian energy firms and state-owned enterprises. Financial institutions facilitating oil trade have also been subjected to tighter controls.
CNN reported that officials argued that they waited until the waning days of the administration to impose the sanctions in part because of the state of the global oil market and the potential impact on the US economy. However, this time the US secured its market by raising the extraction rate of oil forcing OPEC to dial back supply. Oil prices have been relatively subdued, in part because of recent record-shattering US production.
Alongside US sanctions on Russian oil, the Ukrainian Armed Forces continue their drone strikes on Russian critical infrastructure. In the last seven days several such strikes were concluded, including an attack on the “Kristal” oil depot providing fuel for Russian strategic aviation located at Engels Airbase. Moreover in the most recent strike on an ammunition depot in the Rostov region Ukrainian Navy managed to score several hits with Neptune missiles which allegedly broke through oversaturated Russian air defense.
The sanctions are supposed to drain Russian war funds which are mostly fueled by the sale of oil and gas products. In recent months the supply of those resources was enabled due to the operations of the so-called “shadow fleet” of the Russian tankers, which has also become the target of the sanctions.