Guidance on Implementation of the Price Cap Policy for Crude Oil and Petroleum Products of Russian Federation Origin; Publication of Russia-related Determinations; Issuance of Russia-related General Licenses

The Office of Foreign Assets Control, OFAC, has issued two new Determination under Executive Order 14071 which implemented further sanction measures directed against Russia for its aggression and subsequent invasion of Ukraine. Specifically, under the Executive Order it is prohibited to transport, export, or sell crude oil, petroleum and petroleum products originating from Russia. However, such activities are permitted for the benefit of third countries so far as the transported products do not reach the price caps imposed by the G7 nations.
In the first Determination – the so-called „Determination pursuant to section 1(a)(ii), 1(b), and 5 of Executive Order 14071 – Price Cap on Petroleum Products of Russian Federation Origin“, OFAC sets out this price cap on so-called „Discount to Crude“ petroleum products of the Russian Federation at $45 per barrel and the so-called „Premium to Crude“ petroleum products price cap at $100 per barrel.
In the second Determination – the so-called „Determination pursuant to section 1(a)(ii) of Executive Order 14071 – Prohibitions on Certain Services as They Relate to the Maritime Transport of Petroleum Products of Russian Federation Origin“, OFAC expands the scope of non-permissible activities in this context to include – as quoted
(1) Trading/commodities brokering;
(2) Financing;
(3) Shipping;
(4) Insurance, including reinsurance and protection and indemnity;
(5) Flagging; and
(6) Customs brokering in relation to such petroleum products.
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Concurrently, OFAC has issued two new General Licenses (GL) in this context, namely:
1. GL56A which exempts any transactions for purposes of the importation of petroleum products or crude oil „into the Republic of Bulgaria, the Republic of Croatia, or landlocked European Union Member States as described in Council Regulation (EU) 2022/879“.
2. GL57A which permits (financial) transactions and services as they relate to the maritime transport of petroleum products or crude oil of Russian Federation origin in case of emergencies of vessels transporting such. Emergencies thereby include events that threaten the „health or safety of the crew“ or that are necessary for environmental protection purposes, including the „safe docking or anchoring, emergency repairs, or salvage operations“.
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Finally, OFAC has updated its previous Guidance on the „Implementation of the Price Cap Policy for Crude Oil of Russian Federation Origin“ to now issue a combined Guidance on the „Implementation of the Price Cap Policy for Crude Oil and Petroleum Products of Russian Federation Origin“: This guidance outlines the policies and procedures import / export firms, financial institutions, and other entities (e.g. insurance firms) are expected to have in place and follow to be safe from possible violations of the new price cap requirements for the (indirect) transport or importation of Russian crude oil or petroleum products.