US sanctions on firms moving Russian oil may be turning up the pressure on the Kremlin — but they risk scuppering efforts to drive the nation’s petroleum trade out of the shadows.

The US Treasury on Thursday sanctioned a small UAE-based company called Zeenit Supply and Trading DMCC. It did so because the firm used a US service provider to help transport the oil — something that wasn’t permitted because the cargo cost more than $60 a barrel and thereby breached a Group-of-Seven price cap.

But two Greek owners said that such actions — coming on the back of tougher due diligence rules about establishing that cargoes really cost $60 or less — made them more wary of transporting Russian oil, not less. They cited the risk of carrying a cargo from a Russian trader who might get sanctioned mid-voyage. 

It highlights a dilemma faced by the US, UK and their allies in enforcing the price cap. On Wednesday the UK said countries signed up to the policy are trying to force more Russian oil out of a so-called shadow fleet, and back toward using western service providers including Greek owners and European insurers. At the same time, the US has been repeatedly indicating that it will continue to clamp down on evasion of the price cap more aggressively.

But sanctions also risk narrowing the pool of counterparties that western shipowners can deal with. The number of Greek-owned tankers hauling Russian crude slumped in January. 

One impediment to handling Russian barrels in the past few months has been a falling number of Russia-linked traders willing to provide attestations that their shipments are below the price cap. That is set to increase further when more detailed attestation documents come into effect later this month. 

Thursday’s sanctions create an element of uncertainty about which firms might be targeted next and only add to a wariness about returning to the Russian trade. 

Western regulators are concerned about the use of the shadow fleet because it is unclear what insurance the vessels have, and the safety standards being followed. It also helps Moscow to effectively dodge the G-7’s cap because the oil on board has no restrictions on price.

Zeenit Supply and Trading last year handled about 54,000 barrels a day of Russian crude — most of which was sold by Russian producer Zarubezhneft, according to KSE Institute, part of the Kyiv School of Economics and a supporter of tough sanctions on Moscow.