THE Office of Foreign Assets Control found its enforcement teeth in November 2023 when it designated five tankers and their registered owners for breaching sanctions on Russia’s oil and shipping sector — the first imposed since an oil price cap began in December 2022.

A division of the US Treasury Department, Ofac’s approach to sanctions enforcement on shipping dealing with Iran, Venezuela and now Russia has been previously described as oscillating between hands-off and intermittent. 

However, for the past two years, director Bradley Smith — who replaced Andrea Gacki in September, having served as her deputy — and his team have continued greater industry engagement around the world and, during 2023, put the regulatory agency at the forefront of enforcement and compliance on Russia.

The oil price cap is designed to keep oil flowing while restricting revenues to the Kremlin. That near-impossible geopolitical task triggered the rapid expansion of a fleet of elderly tankers able to operate outside Western jurisdiction to circumvent sanctions.

In November 2023, Ofac reportedly sent out a series of “please explain” letters to about 30 shipmanagers, covering 100 tankers suspected of shipping sanctioned Russian oil — focusing on many in the United Arab Emirates. 

Some of the five sanctioned tankers had a nexus to US marine service providers, via the Marshall Islands and Liberian registries, which are run by private companies incorporated in the US.

Ofac’s actions contrast sharply with the European Commission regulators' struggle to close the loopholes that have rendered the price cap on Russian oil almost ineffective when the oil price rises. 

The promise of vigilance and enhanced monitoring is keeping Ofac front of mind as ship operators worldwide contemplate the risks and rewards of shipping commodities from Russia.