On February 3, 2023, the Department of the Treasury (Treasury) issued multiple determinations related to the price cap to be set on Russian-origin petroleum products. Treasury also published finalized guidance on the broader price cap policy implemented by the “Price Cap Coalition” – an international coalition that includes the United States, the G7, the European Union, and Australia – that aims to prohibit certain services for the transportation of Russian crude oil and petroleum products. Such restrictions are intended to reduce Russia’s substantial revenues from the global energy sector and, in doing so, reduce Russia’s ability to fund its ongoing war of aggression against Ukraine. See Update of September 6, 2022 for additional details on the original announcement of the price cap.
Treasury issued a Determination pursuant to Executive Order 14071 of April 6, 2022 imposing a price cap of $45 per barrel on Discount to Crude petroleum products of Russian origin and a price cap of $100 per barrel on Premium to Crude petroleum products of Russia origin, respectively, effective February 5, 2023.
In accordance with a second Determination issued by Treasury, companies can purchase and/or provide services related to the maritime transport of Russian-origin petroleum products only if the petroleum product is traded at or below the per barrel price cap without being potentially subject to sanctions by Treasury’s Office of Foreign Assets Control (OFAC). OFAC has defined “petroleum products” as items listed under the Harmonized Tariff Schedule of the United States (HTSUS) heading 2710. The second Determination does, for a limited wind-down period, exempt either type of Russian petroleum product from the policy cap if it was loaded onto a vessel before February 5, 2023 and will be unloaded before April 1, 2023.
To accommodate the two Determinations related to the price cap on Russian petroleum products, Treasury also issued amended Russia General Licenses 56A and 57A that authorize certain services related to imports for the European Union and allows for providing services to address vessel emergencies.
The price cap on Russian petroleum products follows Treasury’s similar price cap on Russian oil (see Update of December 5, 2022). As a reminder, these price caps do not remove the separate prohibition on the importation of Russian petroleum and petroleum products into the United States that went into effect pursuant to Executive Order 14066 of March 8, 2022 (see Update of March 9, 2022).
Treasury also published finalized guidance on how the United States will implement the broader price cap policy. The finalized guidance supersedes all preliminary guidance OFAC has previously published for both crude oil and petroleum products of Russian origin (see Update of January 4, 2023, Update of September 19, 2022, and Update of November 29, 2022).