U.S. And Allies Increase Pressure on Liberia, Marshall Islands, and Panama to Enforce Russian Oil Sanctions

MONROVIA – In a coordinated effort, the United States, the European Union (EU), and the United Kingdom (UK) are intensifying pressure on Liberia, the Marshall Islands, and Panama to enhance oversight of vessels flying their flags, ensuring compliance with the imposed $60 price cap on seaborne shipments of Russian oil. This move represents a further escalation in Western attempts to enforce sanctions against Moscow in response to its actions in Ukraine.

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By Lennart Dodoo, [email protected]

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According to a source familiar with the matter, the U.S., EU, and UK have communicated their expectations to the aforementioned countries, urging them to prevent ships under their flags from transporting Russian oil above the stipulated price cap. The practice of “flag hopping,” where shell companies use flags of these nations to evade sanctions, has been identified as a loophole, prompting the call for increased vigilance.

Lloyd’s List Intelligence and oil analysts have noted that Panama, the Marshall Islands, and Liberia have been unwittingly involved in the “flag hopping” phenomenon. Approximately 40% of the 535 dark-fleet tankers have registered ownership through companies incorporated in the Marshall Islands, according to Lloyd’s List Intelligence.

The letters addressed to Liberia, the Marshall Islands, and Panama highlight the growing concern over circumvention of the G7’s price cap on Russian oil. They emphasize the elevated risk associated with vessels that lack Western insurance and other services, and the letters warn of the potential consequences for ships seeking alternative flags.

While the three countries are not subject to Russian sanctions themselves, the objective of this pressure campaign is not to reduce the number of ships carrying Russian oil but to tighten compliance with the price cap. Additionally, the initiative aims to raise the cost for Russia to transport oil without using Western shipping services and provide leverage to countries seeking discounted oil from Russia outside the price-cap coalition.

Embassies in Washington for Liberia, the Marshall Islands, and Panama have not responded to requests for comments as of now.

Panama, known for its responsiveness to U.S. requests related to illicit activities, is a key target in this effort. Liberia and the Marshall Islands are being urged to increase awareness within the shipping industry that their flags should not be utilized for tankers transporting oil priced above the cap.

The letters conveying these requests were reportedly signed by Lindsey Whyte, head of international finance at Britain’s Treasury; John Berrigan, head of the European Commission’s financial services unit; and Brian Nelson, the top terrorism financing official at the U.S. Treasury. Reuters has not independently reviewed the letters, and responses from the U.S. Treasury, the British embassy in Washington, and the Delegation of the EU to the U.S. are pending.