EU officials are considering placing sanctions on Russian shipping giant Sovcomflot to try and limit the country’s oil-based revenue as its war with Ukraine continues.
State-owned Sovcomflot is Russia's largest shipping company and has played a key part in transporting Russian oil since multiple western countries imposed sanctions following 2022’s invasion of Ukraine.
Sovcomflot also provides offshore upstream services and the seaborne transportation of liquefied natural gas.
According to Bloomberg, possible sanctions require the backing of all member states to be approved.
The EU is also considering sanctions for 13 vessels involved in shipping goods and technologies used in the defence and security sector.
The G7 nations imposed a price cap on Russia’s crude and oil products exports soon after the invasion in order to limit the country’s access to western shipping and insurance services.
However, after an initial period of adjustment, Moscow has adapted to restrictions, most notably an EU ban on Russian oil imports.
This has been achieved by using a so-called shadow fleet of oil tankers of various sizes to transport oil loads to buyers around the world, primarily in Asia.
Earlier this year, the US sanctioned the shipping company and 14 crude oil tankers identified as being linked to the company in a bid to squeeze oil sales.
However, despite the sanctions, Russia’s hydrocarbons sector is seemingly operating normally. The country reported that oil and gas budget revenues jumped by more than 73% in the January–May 2024 period compared with the same time last year.
According to data on Monday from Russia’s Finance Ministry, between January and May 2024, revenues for the Russian federal budget from oil and gas reached Rbs4.95trn ($55.7bn).
Meanwhile, the county’s annual oil proceeds almost doubled in May, benefitting from crude oil prices being on a general upward trend since the latter part of 2023, according to Bloomberg calculations.
Oil-related taxes rose to Rbs632.5bn just last month, based on Finance Ministry data.
