US Sanctions UAE-based Shipping Firm For Oil Price Cap Violations

Hennesea Holdings, a shipowner based in the United Arab Emirates, has been sanctioned by the Office of Foreign Assets Control (OFAC) of the US Department of Treasury for breaking the Russian crude oil shipments price cap. It was discovered that Hennesea, identified as the beneficial owner of eighteen vessels, including the 2006-built Aframax HS Atlantica, had been involved in transporting Russian crude oil at prices higher than the $60 per barrel cap through a US-based covered provider.

Hennesea was founded in 2022, just before the price restriction was implemented. It is said that the company bought older tankers that regularly made port of calls in Russian Federation ports to transport petroleum products and crude oil. According to shipping statistics, Hennesea acquired around thirty ships between 2022 and 2023, with an average lifespan of about 17 years.

This is the first oil price cap enforcement by the Treasury for 2024; it prevents US persons and businesses from doing business with shippers and prevents shippers from accessing US-owned property. The Treasury Department Deputy Secretary Wally Adeyemo emphasised that these steps further the coalition’s resolve to hold individuals who support the Kremlin accountable.

The Group of Seven Nations, the European Union, and Australia formed the Price Cap Coalition, which decided in 2022 to set a $60 per barrel ceiling on Russia’s oil exports. Moscow has been able to get around these limits because of the rise of a “shadow fleet” of tankers and some purchasers willing to pay more for oil than is officially stated. The coalition strengthened compliance guidelines for shippers and insurance companies in December. Every time they lift or load Russian oil, service providers—including shippers and movers—must now get confirmation from their buyers and sellers.

Furthermore, companies involved in freight and insurance must provide these records to organisations downstream in the supply chain upon request. These steps are intended to improve supervision and guarantee adherence to the price ceiling on exports of Russian crude oil.

Reference: Splash247

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