US Energy Official Advocates for Tighter Restrictions on Russian LNG

In the aftermath of Russia's invasion of Ukraine in early 2022, the United States, Europe, and other G7 nations imposed severe sanctions and trade restrictions on Moscow. The aim was to cripple and eventually collapse President Vladimir Putin's oil and gas industry, which funds the war effort. However, more than two years later, these Western sanctions have not had the desired impact, with Russia's economy continuing to grow.

US Aims to Reduce Russia's Oil and Gas Revenues

Geoffrey Pyatt, US Assistant Secretary for Energy Resources, stated on Tuesday that the US intends to reduce the revenues Russia receives from its oil and gas resources, which are used to fund the invasion of Ukraine. Speaking to Bloomberg Television’s Haslinda Amin, Pyatt explained that the US's price cap policy was designed to prevent disruptions in the global crude oil supply, which could lead to price spikes and increased revenue for Russia's oil exports. The goal is to maintain stability in global supplies while simultaneously reducing Russia's revenues.

India's Role in Implementing Price Cap Policy

Pyatt praised India for its role in implementing the price cap policy, particularly for encouraging its companies to purchase Russian crude oil within the framework of the price cap rules. He also noted the clear messages the Indian government has delivered regarding Russian gas exports.

US Sanctions on LNG

When asked about possible retaliatory measures against China for purchasing sanctioned Russian LNG, Pyatt focused on the LNG sanctions. The aim of these sanctions is to prevent Novatek from redirecting the gas Gazprom used to send to Europe through pipeline exports to global markets. The US has been particularly focused on the Kremlin's flagship project, Arctic LNG two, against which Western sanctions have been aggressively enforced.

Effectiveness of Sanctions

Pyatt claimed that the policy is working, as not one cargo loaded by Arctic LNG two has found an international market. The Biden administration will continue to "tighten the screws" against Russia's LNG exports, which are a significant source of revenue for Putin's war.

Impact on European NatGas Prices

In the markets, European NatGas prices have risen above €40 a megawatt-hour due to near-term supply risks from tensions in the Middle East and production outages in Norway.

Bottom Line

Western powers are increasing pressure on a nuclear power in an attempt to cause an economic collapse in Moscow. This strategy raises questions about potential unintended consequences. What are your thoughts on this matter? Share this article with your friends and let us know your views. Sign up for the Daily Briefing, which is available every day at 6 pm.