US Treasury Guidance on Russian Oil Price Cap Safeguards Maritime Firms

By: News Team

Published on:

The U.S. Treasury released new guidance on Friday on a proposal to cap Western prices on Russian oil exports , saying shipping service providers will not be held accountable for misinformation about prices. prices provided by buyers and sellers of Russian crude.

Treasury said in the guidelines that those who buy Russian crude at prices above the cap and knowingly provide false documentation could be subject to sanctions violation investigations, and Treasury outlined a number of “red flags” that could indicate this type of activity. He also said that governments participating in the cap will share that information to help police it.

The price cap plan agreed to by the wealthy G7 nations requires participating countries to deny insurance, financing, brokerage, shipping and other services to oil cargoes priced above a yet-to-be-determined price cap for crude and petroleum products.

The Treasury said these service providers must keep records of Russian oil shipments for five years.

“Where a service provider without direct access to pricing information reasonably relies on a customer’s statement, that service provider will not be liable for potential sanctions violations by those acting in bad faith” dealing to violate or evade the limit,” says the guide.

EVASION SURVEILLANCE

However, the Treasury warned these companies to be “on the lookout” for red flags indicating potential evasion or fraud, including evidence of deceptive shipping practices, refusal to provide requested pricing information, unusually favorable conditions that could indicate a subsequent agreement to circumvent the price cap, or excessively high service costs.

Any signs of document tampering, start-ups, and anomalous transportation routes should also be of concern.

Consensus on maximum price levels will be reached with the help of a “rotating lead coordinator,” the department said, suggesting that coalition countries will have a temporary leadership role as the plan progresses.

MORE TIME IS NEEDED

Treasury Under Secretary for Economic Monetary Policy Ben Harris said on Friday that it will be a few more weeks before the price cap plan is fully developed, including setting the cap level.

At an event at the Brookings Institution, Harris called on cap skeptics to “wait until you have all the information and maybe don’t shoot before concluding that this is going to be too hard to enforce.”

Western sanctions imposed on Russia over its invasion of Ukraine have caused a sharp collapse in Russian imports, hitting its domestic output hard, at a time when foreign companies have left the country en masse.

At the same time, the Russian oil industry has benefited from a 60% rise in oil prices which has more than offset lower export volumes.

Leave a Comment