Agreement on price cap on Russian petroleum products
On 5 February 2023, the price cap policy for Russian petroleum products took effect in the G7 countries, as well as in the EU and Australia (members of the so-called Price Cap Coalition). The price caps have been set to (i) USD 45 per barrel for petroleum products traded at a discount to crude oil, and (ii) USD 100 per barrel for petroleum products traded at a premium to crude.
The ban on the maritime transport of Russian petroleum products to third countries, as well as the provision of certain related services, do not apply to petroleum products purchased at or below the relevant price cap levels. (Earlier, the price cap on Russian crude oil was set to 60 dollars per barrel and took effect on 5 December 2022, see our previous WR Sanctions Alert from that date.)
Further, the Price Cap Coalition have agreed to a wind-down period, in that the prohibition does not apply to (or specific exemptions are made for) Russian petroleum products (purchased at any price) that that were loaded onto the vessel prior to 5 February 2023 and unloaded at the (final) port of destination prior to 1 April 2023. Certain nuances apply to the implementation of this winddown in the different regimes, including with regards to time zones, reporting and documentary requirements and possible force majeure exemptions.
For more information on EU implementation of the price caps, see the relevant legal acts in the EU Journal at this link, and a press release from the Council of the EU at this link. In addition, certain clarifications relating to the price cap have been made in the updated Commission Consolidated FAQs, including more details on services falling outside the scope of prohibited "technical assistance".
In the US, the price caps and wind-down period have been implemented by way of two OFAC determinations which can be found at this link. OFAC have also issued an updated Guidance on Implementation of the Price Cap Policy for Crude Oil and Petroleum Products of Russian Federation Origin.
In the UK, OFSI have issued a General License to implement the price caps, and a General License implementing the wind-down period. OFSI have also updated its industry guidance on UK Maritime Services Prohibition and Oil Price Cap.
WR Sanctions Alerts provide you with updates on material developments in the country-specific sanctions programmes implemented by the US, the UN, the UK, the EU and Norway. We will not provide updates on mere prolongations, without material changes, of existing sanctions programmes, nor on any listings or de-listings of individuals/entities placed on implemented sanctions lists. Please note that the WR Sanctions Alerts are provided as general information and do not constitute legal advice.