The administration President Joe Biden is considering imposing tougher sanctions on Russia's oil industry, aimed at further curtailing the Kremlin's financial resources. The new measures are being discussed just weeks before Donald Trump takes office as US president, sources familiar with the matter told Bloomberg.
The sanctions under discussion could affect Russian oil exports and trade with the tanker fleet used to transport it. The move is aimed at tightening economic pressure on Russia, with the goal of giving Ukraine a better negotiating position to end the war.
The Biden administration has previously held back from imposing such sanctions over concerns that they could drive up energy prices. Now, however, with oil prices down and the market glut, the White House is considering more aggressive action.
The planned restrictions include measures against the so-called "shadow fleet" from tankers transporting Russian oil, and similar sanctions are being prepared by the European Union. The new sanctions will build on the previous cap on Russian oil prices imposed by the Group of Seven (G7) in 2022, which has proven to have limited impact.
If implemented, the new measures could cause oil prices to rise, leading to global economic hardship. Also, they could exacerbate tensions with major consumers of Russian oil such as China and India, as well as US partners that depend on Russian energy resources.
The latest move would follow restrictions the US imposed last month on Gazprombank, the last major Russian financial institution to be exempted from sanctions. The Biden administration previously decided not to impose sanctions on the bank that European nations use to pay for the gas they still buy from Russia, for fear of causing turmoil in global commodity markets.
Hungary, as well as other countries that rely on Russian gas imports, have already warned that the US decision poses a potential risk to energy security. Turkey also asked for concessions from the sanctions.
With the inauguration of Trump, who has said he will seek a quick end to the war in Ukraine, approaching, the Biden administration aims to strengthen Kiev's financial position ahead of possible negotiations with Russia. At the same time, Trump can cancel part of the measures if he believes that they lead to an unwanted increase in energy prices.