The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) is imposing sanctions on two entities and identifying as blocked property two vessels that used Price Cap Coalition service providers while carrying Russian crude oil above the Coalition-agreed price cap.
As the Treasury informs in a statement, all transactions by U.S. persons or within (or transiting) the United States that involve any property or interests in property of designated or blocked persons are prohibited unless authorized by a general or specific license issued by OFAC, or exempt. These prohibitions include the making of any contribution or provision of funds, goods, or services by, to, or for the benefit of any blocked person and the receipt of any contribution or provision of funds, goods, or services from any such person.
What is the price cap?
The United States is part of an international coalition (the Price Cap Coalition), including the G7, the European Union, and Australia, that have agreed to prohibit the import of crude oil and petroleum products of Russian Federation origin.
These countries have also agreed to restrict a broad range of services related to the maritime transport of crude oil and petroleum products of Russian Federation origin—unless that oil is bought and sold at or below the specific price caps established by the Coalition or is authorized by a license.
This policy is known as the “price cap.” The price cap is intended to maintain a reliable supply of crude oil and petroleum products to the global market while reducing the profits the Russian Federation earns from oil after its own war of choice against Ukraine inflated global energy prices.
In addition the sanctions actions, the Price Cap Coalition has also published a Coalition Advisory for the Maritime Oil Industry and Related Sectors. The Advisory, which is directed at both government and private sector actors involved in the maritime trade of crude oil and refined petroleum products, provides recommendations concerning specific best practices.
We remain committed to implementing a price cap policy that has two goals: reducing the oil profits upon which Russia relies to wage its unjust war against Ukraine and keeping global energy markets stable and well-supplied despite turbulence caused by Russia’s unprovoked invasion of Ukraine. We will continue to take actions to achieve these two goals.
… said Deputy Secretary of the Treasury, Wally Adeyemo
