OFAC Issues Guidance on Implementing Price Cap for Russian Petroleum

OFAC issued preliminary guidance on the implementation of a price cap policy related to the partial ban on the import of petroleum products originating from the Russian Federation (see previous coverage). The price cap will take effect on February 5, 2023.

According to the guidance, the price cap will apply from the time the petroleum products are sold by a Russian entity for maritime transport until the product clears customs in a jurisdiction other than the Russian Federation. OFAC said that the price cap will not apply to petroleum products (i) loaded on to a vessel prior to the effective date and unloaded before April 1, 2023 or (ii) that undergo "substantial transformation" (e.g., refinement) after clearing customs in a jurisdiction other than the Russian Federation. OFAC said that if the petroleum products are not altered and are taken back out to sea, the price cap would still apply.

OFAC stated that it will publish final guidance on the price cap for both crude oil and petroleum products by the effective date.