Treasury officials in the Biden administration are working on a new plan to target Russian oil revenues by imposing penalties on tankers that are helping Russia evade sanctions. The goal is to cut off a significant source of funding for Russia’s war against Ukraine. However, there are concerns within the White House about the potential impact on energy prices, especially with the upcoming November election.
The Russian government has been able to circumvent previous sanctions by using a shadow fleet of tankers and alternative forms of maritime insurance to continue exporting oil at prices above the $60-per-barrel cap imposed by the US and its allies. This has allowed Russia to generate substantial profits despite international efforts to limit its oil revenue.
While Treasury officials believe that targeting the shadow fleet of tankers is necessary to further restrict Russia’s ability to profit from oil exports, economic advisers in the White House are worried about the potential consequences. They fear that disrupting Russian oil shipments could lead to a spike in oil prices, which could in turn increase gasoline prices in the US. This is a significant concern, particularly in the context of an upcoming election where economic issues are likely to be a key focus.
As the debate continues within the administration, it remains unclear whether the proposed plan will be implemented. While Treasury officials argue that the risks of a major impact on the oil market are low, White House aides are hesitant to move forward without a more comprehensive assessment of the potential consequences.
This internal debate highlights the complexity of US efforts to target Russian oil revenues and the challenges of balancing economic considerations with geopolitical objectives. The outcome of this discussion will have significant implications for both the ongoing conflict in Ukraine and the domestic political landscape in the US.