Summary of UK and EU price caps on Russian oil and petroleum products (December 2022 to March 2023)
On 4 February 2023, the European Union and the United Kingdom, together with the international G7 and Australia (the Price Cap Coalition) adopted further price caps for seaborne Russian petroleum products, such as diesel and fuel oil.
Two price caps have been set for petroleum products falling under CN code 2710 which originate in or are exported from Russia.
The first price cap for petroleum products traded at a discount to crude oil is set at US$45 per barrel, while the second price cap for petroleum products traded at a premium to crude is set at US$100 per barrel.
Oil products purchased at or below the price caps are exempt from the ban.
The level of the cap was established in close cooperation with the Price Cap Coalition and is applicable as of 5 February 2023. A transitional period of 55 days is foreseen for those vessels carrying Russian petroleum products, which were purchased and loaded onto the vessel prior to 5 February 2023 and unloaded earlier to 1 April 2023.
The UK’s Office of Financial Sanctions Implementation (OFSI) published a blog on the oil price cap which can be found here.
The BVI Governor issued General Licence No. 01 on the Russian Oil Cap following the UK and the EU’s agreement setting an oil price cap on Russian crude oil that came into effect on 5 December 2022. BVI’s General Licence No. 01 has been published to the Gazette on 12 January 2023 and can be found here.
Our previous blog post on the Russian oil services ban and price cap agreement between the EU and UK, together with the G7 countries and Australia, can be found here.
On 5 February 2023, OFSI released updated guidance on the Maritime Services Prohibition and the Oil Price Cap, which provides full detail of the implementation of the price caps, OFSI’s approach to enforcement, and the requirements on involved persons. Bespoke forms for required reporting, reporting suspected breaches, and specific license applications are available here.
OFSI has updated its list of reporting forms in relation to the Russian oil services ban and price caps which can be found here.
In March 2023, OFSI issued updated guidance on the UK maritime services prohibition and price cap. The guidance has been updated to reflect the price cap on refined Russian oil products and the wind-down period for oil products loaded on ships prior to 5 February 2023. The updated guidance can be found here.
On 21 March 2023, the Government of Bermuda, and in particular the Financial Sanctions Implementation Unit (FSIU), issued General Licence 2023/02GL under Regulation 64 of the Russia (Sanctions) (EU Exit) Regulations 2019 as extended by the Russia (Sanctions) (Overseas Territories) Order 2020 via the International Sanctions Regulations 2013. General Licence 2023/02GL permits the supply or delivery of Russian oil and oil products by ship, as well as provision of associated services, subject to the price cap terms being met. Reports to the Minister of Legal Affairs and Constitutional Reform, in compliance with this licence, should be sent to the FSIU (firstname.lastname@example.org). Bermuda’s General Licence can be found here.