Trump’s team prepares oil sanctions plan to increase pressure on Russia and Iran, Bloomberg says
Pravda Ukraine
Advisers to President-elect Donald Trump are developing a wide-ranging sanctions strategy to help facilitate a diplomatic agreement between Russia and Ukraine in the coming months while simultaneously putting pressure on Iran and Venezuela.
Source: Bloomberg
Details: On Friday, the outgoing Biden administration imposed the most crippling sanctions on oil trade with Russia of any Western nation to date. The move left open the question of how Trump views these measures, given his commitment to bringing the war in Ukraine to a swift end.
Trump’s team is considering two main approaches to dealing with sanctions against Russia. One option involves some measures to support sanctioned Russian oil producers if a peace deal in Ukraine is deemed to be close. The other approach is based on strengthening sanctions to increase pressure on Moscow and increase leverage.
The approach taken will have important implications for the global oil market. Since the Biden administration announced the measures, Brent crude oil futures have risen by almost US$5 per barrel. Experts predict a possible further price increase, which will affect global fuel markets.
At the moment, the Trump team’s plans are still under development, and the final decision depends on the position of the newly elected president. Last week, Trump announced that he was preparing to meet with Putin, which could indicate potential negotiations to end the war in Ukraine.
Trump’s cabinet nominees, former government officials involved in sanctions, and conservative think tanks have joined the discussion of the strategy. The composition of key officials responsible for economic policy has not yet been determined.
The first test will be in mid-March when the general licence to curtail purchases of Russian energy resources expires. If it is not extended, this will increase pressure on Russia.
Experts from the Trump team believe that a tough scenario involves toughening secondary sanctions on oil trade and imposing restrictions on European shippers and Asian buyers, such as large companies from China and India. Another measure could be to control tankers transporting Russian oil through the strategically important Turkish and Danish straits.
A more lenient approach could include issuing general licences and raising the price cap on oil to more than US$60 per barrel. This could encourage the continuation of Russian oil supplies to the market.
Background:
- Exports of oil products from Russia reached an 11-month high in January, despite new US sanctions against the country’s energy sector.
- The US Treasury Department’s Office of Foreign Assets Control imposed sanctions on two of Russia’s largest oil companies, Gazprom Neft and Surgutneftegas, as well as ship insurance providers Ingosstrakh and AlfaStrakhovanie.
- Financial Times indicated that the measures include adding 183 shadow fleet vessels involved in exporting Russian energy resources to the blacklist.
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