With just ten days left until President-elect Trump takes office, President Biden has imposed today the most significant sanctions to date on Russia’s energy sector, targeting key players in the Kremlin’s oil revenues. The eleventh-hour move is expected to disrupt funding for Russia’s war efforts.
As The Pavlovic Today previously reported, speculation surrounding the inclusion of Serbia’s Russian-majority-owned oil company, NIS, in the sanctions was met with silence from the State Department, which neither confirmed nor denied reports.
Russia is now in the penalty box.
Senior administration official.
Sources within the Trump transition team at the time had expressed skepticism that such a step would be taken so close to Biden’s departure. Today’s announcement confirms an old Washington adage: where there’s smoke, there’s fire.
A senior Biden administration official told The Pavlovic Today that the sanctions align with calls from some Republican members of Congress, including the incoming national security advisor, Rep. Mike Waltz.
“The actions we’re taking are consistent with steps that a number of people have called on us to take. Ultimately, what these sanctions do is they put the incoming administration in a position where they frankly, are helping create more accountability for Russia, and they help as Ukraine seeks a just peace,” the senior administration official said.
The sanctions target major oil producers, including Gazprom Neft and Surgutneftegas, along with over 180 vessels, dozens of oil traders, and other entities tied to Russia’s energy sector. “These measures are expected to cost Russia billions of dollars per month,” the official confirmed.
In addition to the two energy giants, the Office of Foreign Assets Control (OFAC) designated over two dozen subsidiaries, including Serbia-based NIS AD Novi Sad. All entities owned 50 percent or more, directly or indirectly, by Gazprom Neft, Surgutneftegas, or their subsidiaries listed today, are also subject to blocking, even if not identified by OFAC.
Why now?
When asked about the timing of sweepings sanctions, a senior administration official pointed to improved global energy markets and U.S. economic conditions.
“During much of this war, global supplies were tight and at risk of falling short of demand, which meant that reducing Russia’s oil exports to the world would likely push up Putin’s export revenues, while raising prices at the gas pump for families in the United States and across the world,” said the senior administration office.
“ That’s why we unveiled a novel price cap in December of 2022 to limit the price that Russia receives for its oil sales while keeping steady the global supply of energy,” official added.
The moment was ripe to change our strategy, and the President took action.
Senior administration official
Since the start of the war, benchmark oil prices have fallen by nearly $35 per barrel, and U.S. gas prices have dropped from $4 to just over $3 per gallon. This economic context allowed for stronger action.
“To put it plainly, the context changed, and so the moment was ripe to change our strategy, and the President took action,’ said a senior administration official.
The measures, according to the administration official, aim to cripple Russia’s war machine without targeting other nations.
“We’re not targeting any particular country,” official clarified. “All the countries that are purchasers of Russian oil have clear alternatives in the marketplace today.” These alternatives, the official noted, include supplies from the United States, Canada, and Middle East.
What this strategy also does according to the official is allow those countries who purchase from Russia to negotiate “even better prices” given that Russia doesn’t have many alternatives.
“Russia is now in the penalty box,” the official stated, adding, “That is going to remain the case for so ever, long as Putin continues his illegal and unjustified war.”
As for whether the Trump administration might reverse the sanctions, the official commented:
“It’s entirely up to them to determine whether, when, and on what terms they might lift any sanctions we’ve put into place. What I can say is that we believe these sanctions, plus the recent steps we’ve taken to improve Ukraine’s staying power on the battlefield and to reduce its economic vulnerabilities, provide the next administration a considerable boost to their and Ukraine’s leverage in brokering a just and durable peace.”
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