US Targets Sovcomflot Manager and Russian Traders for Price Cap Violations

Seeking to further tighten the enforcement of the price cap on Russian oil, the U.S. Treasury Department today announced its fourth round of sanctions over the past two months targeting shipowners and vessels involved in the trade. Today’s actions follow the European Union which yesterday imposed another wave of sanctions including steps to unmask the swapping of tankers to elude enforcement efforts.

Today’s actions again targeted Russia’s state-owned shipping giant Sovcomflot by listing one of the company’s primary managers. Sun Ship Management, based in the United Arab Emirates, the Treasury Department highlighted as owned by the Russian government and managing the vessels of Sovcomflot. The announcement specifically highlights that Sun manages the SCF Primorye (150,000 dwt crude oil tanker registered in Russia) which Treasury says has engaged in transporting oil above the $60 price cap and had been previously listed.

“Participants in the maritime transport of Russian oil, especially Tier 1 actors like traders, must adhere to the compliance guidelines agreed upon by the Price Cap Coalition or face the consequences,” said Deputy Secretary of the Treasury Wally Adeyemo.

In addition to directly targeting the ship manager, the latest effort listed what Treasury called “several obscure oil traders” who have emerged as frequent participants in the seaborne transportation of Russian-origin oil following the imposition of the price cap. Today’s action detailed that since the imposition of the price cap, little-known oil traders with opaque ownership structures have emerged as frequent participants in the seaborne transport of oil produced by major Russian oil companies. Treasury states that these companies are responsible for transporting up to half of Russia’s oil exports.

One Hong Kong-based company, Covart Energy was linked to charters of three vessels, the HS Atlantica, NS Champion, and Viktor Bakaev, all of which have previously been identified for price cap violations. The U.S. listed these vessels along with Dubai-based managers in a previous round of the price cap sanctions. Covart they contend has managed at least 23 port calls in Russia since the price cap was imposed. 

The largest shipper however was identified as a trader named Bellatrix Energy also based in Hong Kong. Treasury says that the company has managed over 150 port calls in Russia since the price cap was imposed. A third company, UAE-based Voliton DMCC was also listed for having run at least eight port calls in Russia since Jue 2023.

The list of entities cited by the U.S. also shows the addition of a Russian-owned and registered product tanker. The 7,000 dwt Sanar 15 which is operating in the Black Sea region sailing from Roston-on-Don was added to the list.

The U.S. began its efforts to tighten the enforcement of the price cap in October and since then has announced several rounds of sanctions mostly targeting managers and individual ships. Questions have been raised about how effective the efforts are, but Bloomberg for example is today reporting that at least six vessels carrying nearly five million barrels of Russian oil were stopped before making deliveries to India. Other reports have shown that some of the listed tankers appear to have been idled recently. 

The U.S. State Department said today working with its coalition partners that it is committed to tightening compliance and enforcement of the price cap policy on Russian oil. They said the efforts would continue to impose sanctions on those engaged in deceptive practices and that they may also update compliance rules and regulations.