Details surrounding Russia’s oil cap, as well as penalties and bans imposed on shipping companies violating the sanctions, have surfaced.
The Group of Seven countries, including Canada, France, Germany, Italy, Japan, the United Kingdom and the United States, are set to announce price caps on Russian oil exports shortly. It is speculated that the price cap, which is set to take effect on December 5, will initially be around US$60 per barrel and will be adjusted regularly.
Meanwhile, the U.S. Treasury released a 12-page report detailing how American companies will behave after May 5th Appointment in dealing with Russian oil. “The United States is part of an international coalition, including the G7, the European Union and Australia, which has agreed to ban imports of crude oil and petroleum products from the Russian Federation,” the introduction reads.
It further clarifies, “In short, the Decision authorizes U.S. persons to provide Covered Services when Russian oil is purchased at or below the price cap.”
Oil vessels loading their oil before December 5th will be given a 45-day grace periodth. “Consequently, U.S. service providers may continue to provide covered services in respect of crude oil from the Russian Federation purchased at any price, provided that the crude oil is loaded onto a ship at the port of loading for maritime transport before 12:01 a.m. December 2022, Eastern Standard Time, unloaded and unloaded at the port of destination before 12:01 p.m. Eastern Standard Time, January 19, 2023,” clarifies the report by the US Treasury Department in cooperation with the G7 countries.
However, any ship “deliberately” carrying Russian crude oil or petroleum products will be banned from traffic for 90 days after unloading if the price of oil is above the proposed threshold.
The New York Times has reported that it will be up to European shipping companies to ensure that the price of oil trades at or below the capped price level. Otherwise, they will be held legally liable for violating the sanctions.