EU Plans to Sanction Russia's Sovcomflot PJSC to Curb Kremlin's War Financing

By Madz Dizon

Jun 12, 2024 05:33 AM EDT

EU Plans to Sanction Russia's Sovcomflot PJSC to Curb Kremlin's War Financing — A protestor holds a crossed out flag of Russia during a rally against the controversial "foreign influence" bill in Tbilisi on May 3, 2024.
(Photo : VANO SHLAMOV/AFP via Getty Images)

A document seen by Bloomberg indicates that the European Union is considering sanctioning the oil-shipping behemoth Sovcomflot PJSC, a Russian company, in an effort to restrict the financial resources available to the Kremlin for its conflict with Ukraine.

US Sanctions on Sovcomflot Pose Revenue Threat

The CEO of Sovcomflot admitted last week that the US sanctions have restricted the firm's activity and may affect revenues this year, which is a rare acknowledgment from a big Russian enterprise acknowledging the damage that western sanctions against Moscow are causing.

In an effort to put pressure on oil sales, the United States decided earlier this year to penalize Sovcomflot and fourteen crude oil vessels associated with the corporation.

This decision was followed by the European proposal. The potential EU sanctions can only be implemented with the support of all member states, and there's still time for the proposal to evolve.

In addition, thirteen ships that either transport oil and petroleum products or aid in the growth of Russia's energy industry are being considered for sanctions by the European Union.

These ships are involved in the transportation of goods and technology utilized in the defense and security sector.

Russian Shipping Giant Sovcomflot Thrives Amid Western Sanctions

The biggest Russian shipping business, Sovcomflot, is owned by the state and has been instrumental in transporting Russian oil despite western sanctions imposed on Russia after its invasion of Ukraine in 2022.

Liquefied natural gas transportation by water and offshore upstream services are also offered by the same firm.

According to Bloomberg, the Group of Seven industrialized nations limited Russia's access to western shipping and insurance services by imposing a price limitation on Russia's crude and oil product exports in reaction to Russia's war in Ukraine.

By using a vast shadow fleet of tankers and selling its oil to Asian buyers, Moscow has adjusted to restrictions, such as the European Union's embargo on Russian oil imports.