In the latest effort to address Russia’s invasion of Ukraine, on September 2, 2022, the G7 Finance Ministers issued a statement confirming their intention to finalize and implement a price cap with respect to Russian-origin oil. As described, the plan would implement a comprehensive prohibition of services which enable maritime transportation of Russian-origin crude oil and petroleum products globally – the provision of such services would only be allowed if the oil and petroleum products are purchased at or below a price (“the price cap”) determined by the coalition of countries adhering to and implementing the price cap.

The G7 leaders announced that they intend to seek a broad coalition in order to maximize the effectiveness of any price cap, and reaffirmed their intent to phase out Russian oil from their domestic markets. According to the statement, the initial price cap “will be set at a level based on a range of technical inputs and will be decided by the full coalition in advance of implementation in each jurisdiction.” The price cap will be “publicly communicated in a clear and transparent manner” and its “effectiveness and impact will be closely monitored and the price level revisited as necessary.”

This is an initial announcement and the price caps have not yet been implemented. The Department of the Treasury’s Office of Foreign Assets Control (OFAC) is expected to publish preliminary guidance on the implementation of the price cap later in September 2022. The preliminary guidance will provide a high-level overview of this mechanism, including how U.S. persons can comply, in advance of formal guidance and legal implementation.