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Russia oil fleet shifts far from Liberia, Marshall Island flags amidst United States sanctions crackdown

Lots of oil tankers used by Russia have stopped cruising under the Liberian and Marshall Islands flags in current weeks after the United States ramped up sanctions enforcement on ships linked to those computer system registries, according to shipping information and interviews with industry and government authorities.

The shift reflects the close relationship between the U.S. and the flag administration companies of Liberia and the Marshall Islands, which are headquartered not in their home nations, however in Virginia, just miles from Washington D.C. and within the jurisdiction of U.S. sanctions enforcement.

The heavy past use of those flags also represents a. potentially lasting vulnerability for Russia's oil fleet, whose. tankers will remain accountable for sanctions offenses even after. they have changed to a new flag beyond U.S. reach,. according to energy and sanctions professionals.

They've created an enduring liability and long-lasting danger,. said Craig Kennedy, a center partner at Harvard University's. Davis Center for Russian and Eurasian Research Studies.

Commercial ships should be registered, or flagged, with a. particular country to ensure they are abiding by. worldwide acknowledged safety and ecological rules.

analyzed LSEG and Lloyd's List Intelligence shipping. data, and interviewed federal government officials, flag computer system registry. agents and shipping analysts to offer formerly. unpublished details on the role of flag windows registries in the recent. wave of U.S. sanctions statements targeting Russia's oil. fleet, and the vulnerabilities they position to Russian oil. shipping.

The G7, the EU and Australia imposed a $60 a barrel cost. cap on Russian oil exports in December 2022 as part of wider. economic sanctions targeted at cutting Moscow's incomes without. interfering with worldwide energy supplies, following Russia's intrusion. of Ukraine.

When, the cap bans the use of Western maritime services. tankers carry Russian oil priced at or above the cap. A U.S. official, who requested privacy when discussing the. sanctions, verified that the Liberian and Marshall Islands flag. computer system registries certify as Western services.

Considering that October, the U.S. Treasury Department has enforced. sanctions on some 41 oil tankers for Russian cost cap. offenses, 24 of which were flying the Liberian flag and among. which was utilizing the Marshall Islands flag.

Practically all of the other tankers were flagged in Gabon,. including 12 of the 14 targeted by the Treasury Department in. its newest bundle of sanctions on Feb. 23. Of those. Gabon-flagged tankers, in which Russia's top shipping business. Sovcomflot (SCF) has an interest, at least three had recently. flown the Liberian flag, according to ' analysis of. delivering information.

Those tankers were among a multitude of ships in the SCF fleet. transferring to Gabon, according to the information: since early February,. SCF had 42 tankers in its 147 tanker fleet that had recently. shifted to the Gabon flag, mainly from Liberia and Panama.

SCF decreased to comment and Russia's transportation ministry did. not react to an ask for remark.

The Liberian flag computer registry told that all the. Liberian-flagged vessels which were approved remained in the. procedure of having their Liberian flags eliminated. We are all. residing in a various world right now and the windows registries require to. adjust to what the global situation is at this point, the. Liberian registry said.

The computer registry decreased to comment on its previous. company with SCF.

A U.S. authorities told that Liberia had actually been actively. engaged with the Treasury Department, which sanctioned. tankers have about a three-month wind down duration to change to. another flag.

Marshall Islands registry officials are likewise in contact with. U.S. agencies on the issue, a Marshall Islands computer registry. representative stated.

Gabon Transport Minister Loic Moudouma validated to. that numerous tankers had left the Liberia registry for. Gabon recently, and said Gabon would de-list them if they are. discovered to be participated in illegal activity.

We are not a flag registry for the world's rogue navigators. or transporters, he said.

If any ally, any partner worldwide, recognizes that. there is a Gabonese ship flying the Gabonese flag and bring. out prohibited activities, all they need to do is send us the file. completely and we will take steps to remove the flag from this ship. ourselves. Whether Russian or any other citizenship.

Panama officials did not react to a request for. comment.

WELCOMING DIFFICULTY

The sanctions imposed so far have sent out a chill through the. market involved in Russian trade.

A lot of the still to be de-listed Liberian-flagged vessels,. Are stuck, sitting at anchor outside of ports. across the world consisting of in the Black Sea, according to. delivering information, marking a pricey liability for their owners and. those economically linked to their freights.

U.S. Treasury Department sanctions can have a contagion. impact on tankers by detering market gamers from handling. them, according to Harvard's Kennedy.

In the dollar denominated world of oil trading, why put a. deal worth 10s of countless dollars at risk by using a. obstructed tanker? You're just welcoming difficulty for everybody. involved, he stated.

Changing to the Gabon flag might also invite extra. danger at ports for tankers bring Russian oil.

A U.S. official said tankers that brought Russian oil above. $ 60 that change to the Gabon flag might likewise have a more. hard time with port authorities concerned about the safety. of ageing tankers.

The United States, European Union and UK issued a letter. late last year pressing Liberia, the Marshall Islands and. Panama to increase oversight of ships bring their flags to. guarantee they do not transport Russian oil offered above the cost. cap, a source told at the time.

While the U.S. has been the main enforcer of the cost. cap, other countries in the mechanism are working with. Washington to tighten the screws.

We're making it harder for Russia to use its shadow fleet,. which in turn would force more volume back into the G7 fleet,. where provider are compliant with the cap, Olga. Dimitrescu, an authorities at the UK Treasury's sanctions. enforcement arm OFSI informed a Feb. 1 podcast with ship insurer. NorthStandard.

U.S. officials state shipping practices associated with the. export of Russian oil above the West's cost cap remain in their. crosshairs. We are really concerned about evasion, I think that's. clear from the actions we have actually taken, Claire McCleskey, an. official with the U.S. Treasury's sanctions enforcement arm. OFAC, told a New York shipping conference last month.

You can anticipate our continuing to do something about it..

(source: Reuters)