OFAC Sets Russian Petroleum Products Price Cap, Updates Guidance
The Office of Foreign Assets Control updated its Russian price cap guidance last week to include information on the recently imposed cap on Russian petroleum products. The measure -- which took effect 12:01 a.m. EST on Feb. 5 -- sets a $45 per barrel cap for petroleum products that trade at a discount to crude, such as naphtha and waste oils, and a $100 per barrel cap on products that trade at a premium to crude, such as motor fuel.
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The new petroleum products price cap “builds on the price cap on Russian crude oil exports that” the G7, EU and Australia set in December (see 2212050014), Treasury Secretary Janet Yellen said, “and helps advance our goals of limiting Russia’s key revenue generator in funding its illegal war while promoting stable global energy markets.”
OFAC’s updated guidance now includes references to the established price caps for Russian petroleum products, and the agency also outlined the various service prohibitions on Russian petroleum products, including restrictions on trading and commodities brokering, financing, shipping, and insurance, flagging and customs brokering. For the petroleum products cap, OFAC said it defines “petroleum products” as items listed under U.S. Harmonized Tariff Schedule heading 2710.
OFAC also officially announced the wind-down period outlined by the agency in December (see 2212300034), which will exempt Russian petroleum products loaded onto a vessel before 12:01 a.m. EST Feb. 5 and unloaded before 12:01 a.m. EST April 1 from the restrictions. OFAC’s guidance for covered services, its safe harbor protocol and due-diligence expectations remain largely unchanged from OFAC’s previous guidance issued in November (see 2211230047).
OFAC also updated two general licenses to incorporate references to the petroleum price cap. GL 56A which replaced 56, authorizes certain transactions related to Russian oil shipping services for imports of Russian oil and petroleum products into Bulgaria, Croatia or certain landlocked EU member states. GL 57A, which replaced 57, authorizes certain transactions related to vessel emergencies, including for the health or safety of the crew or environmental protection, including transactions related to safe docking and anchoring, emergency repairs and salvage operations.