G7 leaders agreed last month to implement a price cap on Russian oil sales starting December 5, 2022. In conjunction with the G-7 agreement, on October 31, 2022, the U.S. Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) issued FAQ 1094, which stated that shipments and services related to the maritime transport of Russian oil will be exempt from the U.S. price cap if the oil is loaded before December 5, 2022 and unloaded by January 19, 2023.
Pursuant to FAQ 1094, crude oil of Russian Federation origin that is loaded onto a vessel at the port of loading prior to 12:01 a.m., eastern standard time, December 5, 2022, and unloaded at the port of destination prior to 12:01 a.m., eastern standard time, January 19, 2023, will not subject to the price cap. U.S. service providers can also provide services related to the maritime transport of crude oil of Russian Federation origin at a price above the price cap, if loaded and unloaded in accordance with the aforementioned timeframes.
OFAC anticipates implementing the maritime services policy by publishing a determination pursuant to Executive Order ("EO") 14071 that (i) permits the exportation, reexportation, sale or supply, directly or indirectly, from the United States, or by a United States person, wherever located, of services related to the maritime transport of crude oil or petroleum products of Russian Federation origin, where the price of such crude oil or petroleum products of Russian Federation origin does not exceed the price cap and (ii) prohibits such services if the crude oil or petroleum products of Russian Federation origin are priced above the cap. This determination would take effect at 12:01 a.m., EST, December 5, 2022, with respect to maritime transport of crude oil of Russian Federation origin loaded on or after 12:01 a.m., EST, December 5, 2022.
On November 10, 2022, OFAC issued General License (“GL”) 53, GL 8D and FAQ 1096 related to the Russian Harmful Foreign Activities Sanctions Regulations, 31 CFR part 587 (the “RuHSR”).
For additional information involving Russia-related sanctions, visit Locke Lord’s Russia Sanctions Resource Center.
This paper is intended as a guide only and is not a substitute for specific legal or tax advice. Please reach out to the authors for any specific questions. We expect to continue to monitor the topics addressed in this paper and provide future client updates when useful.
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