US published a document providing guidance on the implementation of the price cap policy for crude oil of Russian Federation origin.
The price cap policy is intended to maintain a reliable supply of oil to the global market while reducing the revenues the Russian Federation earns from oil after its own war of choice in Ukraine inflated global energy prices.
To implement the price cap policy for Russian oil, OFAC issued a determination pursuant to Executive Order (E.O.) 14071 (“Prohibitions on Certain Services as They Relate to the Maritime Transport of Crude Oil of Russian Federation Origin”).
The effect of the determination is to authorize U.S. persons to provide certain services as they relate to the maritime transport of Russian oil, as long as that Russian oil is purchased at or below a certain price. The covered services are:
- Trading/commodities brokering;
- Financing;
- Shipping;
- Insurance, including reinsurance and protection and indemnity;
- Flagging;
- Customs brokering.
In short, the determination authorizes U.S. persons to provide covered services if the Russian oil is purchased at or below the price cap.
As explained further in this document, OFAC has established a safe harbor process, so that U.S. service providers can provide covered services without concern that they will be penalized for inadvertently violating U.S. law or regulation.
U.S. service providers that comply in good faith with this safe harbor process, as set forth in this document, will not face OFAC penalties.
For crude oil of Russian Federation origin, the determination takes effect at 12:01 a.m. eastern standard time on December 5, 2022.
Moreover, as stated in the determination and further explained in Frequently Asked Question (FAQ) 1094, crude oil of Russian Federation origin that is loaded onto a vessel at the port of loading prior to 12:01 a.m. eastern standard time, December 5, 2022, and unloaded at the port of destination prior to 12:01 a.m. eastern standard time, January 19, 2023, is not subject to the determination.
Consequently, U.S. service providers can continue to provide covered services with respect to crude oil of Russian Federation origin purchased at any price, provided that the crude oil is loaded onto a vessel at the port of loading for maritime transport prior to 12:01 a.m. eastern standard time, December 5, 2022, and unloaded at the port of destination prior to 12:01 a.m. eastern standard time, January 19, 2023.
The determination does not authorize the import of Russian oil into the United States, which is prohibited pursuant to E.O. 14066.
EXPLORE MORE at ofac’s guidance for the price cap
