US senators want secondary sanctions on Russian oil

Democratic and Republican senators on Tuesday proposed that the administration of US President Joe Biden use secondary sanctions against international banks to tighten the price cap that G7 countries plan to impose on Russian oil following the invasion of the Ukraine via Moscow.

Democratic Senator Chris Van Hollen and Republican Senator Pat Toomey announced a legislative framework to impose the secondary sanctions, which would target financial institutions involved in trade finance, insurance, reinsurance and oil and petroleum products brokerage. Russians sold at prices exceeding the ceiling.

Both senators are members of the Senate Banking Committee, which oversees sanctions policy.

They said the ability to target banks would make it harder for Russia to evade price caps through deals with countries not formally participating in the G7 program.

“If you want to put a global price cap on Russian oil, you have to make sure it’s enforced evenly. And to do that, we think you need the support of secondary sanctions,” van Hollen said during a briefing. a call with reporters after a Banking Committee hearing on sanctions against Russia.

“I think the president needs new authority from Congress to apply the price caps to anyone who buys oil from Russia at a price above the cap or in significantly increased volumes,” Toomey said during the briefing. call.

The Biden administration has been reluctant to impose secondary sanctions, fearing they could complicate relations with Russian oil importers like China and India.

Elizabeth Rosenberg, Assistant Secretary of the Treasury for Terrorist Financing and Financial Crimes, told the hearing that the price cap was a powerful tool to hit Russia and stabilize energy prices.

The US Treasury said anyone who falsifies documents or otherwise conceals the origin or price of Russian oil will face consequences under the domestic law of jurisdictions implementing the price cap.

The Group of Seven announced the price cap plan this month to limit Russia’s lucrative oil export revenues following the invasion. Several countries have banned imports of Russian crude and fuel, but Moscow has managed to maintain revenue thanks to increased crude sales to Asia.

“We believe the price cap will have a powerful effect by doing several things, certainly in the first place by denying Russia’s revenue to fund its war,” Rosenberg said. “And second, by keeping Russian oil in the market at lower prices, it will reduce the potential for price spikes in the market.”

Also at the hearing, Democratic Senator Kyrsten Sinema asked Rosenberg what Washington could do to combat the country’s producers mixing Russian oil with crude from other countries to circumvent sanctions.

Rosenberg said Treasury will issue guidelines to address the issue in the coming weeks.

“We have the opportunity to offer more clarity and guidance on this important point in upcoming guidance and frequently asked questions that the U.S. government will release in the coming weeks,” she said.

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