ive here. The United States has so far largely refrained from “secondary sanctions,” as in trying to impose US sanctions on countries that do business with Russia in ways that would be sanctions violations if carried out by American people. China has already stated, out loud, that the United States has no activity to interfere in its relations with Russia, so I would expect a very aggressive response if this plan goes anywhere.
Moreover, if the idea is to try to prevent other countries from buying Russian oil, then the example of Iran says that this was not very successful. China imports oil from Iran, and Japan imported oil through 2019 thanks to exemption from US sanctions. If the US were to punish the Chinese banks that facilitated oil trade with Russia by cutting off their access to dollar clearing banks like JP Morgan, by kicking them out of Swift, or revoking US licenses, the odds are good, it could end up backfiring again. But China and Russia were already planning to get China to pay for Russian oil in renminbi and rubles, which would put them outside US payment mechanisms and thus the ability to see activity.
However, this proposal may gain more momentum once the “liberated” lands set the dates for the referendums.
Written by Julian Geiger, veteran editor, writer, and researcher for Oilprice.com. Originally published in OilPrice
Reuters said, on Tuesday, that members of the Senate have introduced legislation that would impose secondary sanctions on Russian crude oil, in a move that could stir up two of Russia’s largest oil importers, China and India.
Democratic Senator Chris Van Hollen and Republican Senator Pat Tomey — members of the Committee on Banking, Housing, and Urban Affairs — appealed to the Biden administration to enact secondary sanctions on Russian crude oil and crude oil products. If passed, the legislation would target Russian banks, other financial institutions, insurance companies and oil brokers that exceed a set price cap, which senators suggest should be imposed no later than March 2023.
The two senators said targeting banks would make it more difficult for Russia to evade the rate ceiling by making deals with countries that are not party to the cap discussed earlier this month, outside the G7.
The administration requires “new power from Congress” to choke off Russian oil revenues, says a statement from Van Hollen.
The legislation’s ultimate goal is to make it difficult for buyers to circumvent the price cap, which is designed to restrict Russia’s revenue stream from selling oil and petroleum products, which it will then use to fund its activities in Ukraine.
“I promise to work with Senator Van Hollen to pass this bill as soon as possible so that Russia can no longer profit from the oil sales that fund its war in Ukraine,” Tommy said at a committee meeting on Tuesday, according to Reuters.
Elizabeth Rosenberg, Assistant Secretary of the Treasury for Terrorist Financing and Financial Crime, said at the committee meeting that the committee also believed that setting a price cap would “reduce the potential for market prices to rise.”
Rosenberg also indicated that there are upcoming guidelines that will address the issue of mixing Russian crude with crude from other sources to circumvent those sanctions.