U.S. Talks Tough on Russia and Iran—So Long as It Doesn’t Raise Gas Prices
https://www.wsj.com/business/energy-oil/biden-us-gas-prices-iran-russia-oil-4f9a1cf9
There is frustration among some staffers in the U.S. Treasury Department over the lack of action against oil-trading networks that ferry Russian and Iranian oil, including one that officials are currently investigating, according to U.S. diplomats and some of the energy-industry players briefed by current officials.
The network is operated by a little-known trader from Azerbaijan who emerged as the premier middleman for Russia’s Rosneft Oil, The Wall Street Journal reported.
Supporters of the policy within the administration say the moves are finely balanced to keep prices low, but throw sand in the gears of Russia and Iran’s oil export machines, meaning they earn less from each barrel of oil they sell.
“Our two goals, which are lowering costs for the American people and lowering profits for the Kremlin, are very much aligned with each other,” a senior Treasury official said.
When the Treasury imposed sanctions on Russia’s state tanker owner, Sovcomflot, it also issued licenses exempting all but 14 of the company’s fleet, which data provider Kpler estimates totals 91 ships. Industry players say the exemption licenses were a green light to oil traders to do business with those ships, minimizing the risk that they would be targeted by future sanctions.
The National Economic Council, led by Lael Brainard, and others within the administration worried that broader measures would lead to logistical problems in the oil market and boost inflation, said people familiar with the matter. Rising oil output from sanctioned countries is one reason crude prices have fallen from their highs earlier this year, analysts say.
In another example of the collision of foreign and energy policies, earlier this year, Washington asked Ukraine to stop attacking some Russian refineries with drones after the damage rattled global diesel and gasoline markets.
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“Nothing terrifies an American president more than a gasoline pump price spike,” said Bob McNally, president of consulting firm Rapidan Energy Group and former White House policy official under George W. Bush. “They will go to great lengths to prevent this, especially in an election year.”